How to Use the Retirement Planner for Therapists

Retirement planning can feel overwhelming, especially when you’re self-employed and your income may depend on things like your session rate, number of sessions per week, time off, taxes, and overhead.

This retirement planner is designed to help you answer a simple question:

How much do I need to save each month for retirement?

Here’s how to walk through the calculator.

Step 1: Calculate Your Take-Home Pay

First, we’re going to look at your take-home pay.

If you already know your monthly net take-home pay after taxes and expenses, put that number into the first box.

If you don’t know your monthly number, you can click on Annual Take-Home and enter how much you take home each year.

And if you’re not sure about either number, click Help Me Figure It Out.

That section will walk you through:

• Your average session rate
• Sessions per week
• Weeks off per year
• Tax rate
• Operational overhead

We default to four weeks off per year because we want you to have at least a month off each year.

For your tax rate, make sure you’re including things like self-employment tax. If you’re not sure what to enter, click the little information icon for more guidance.

The calculator will then bring everything together to show your:

• Gross annual income
• Operational overhead
• Estimated taxes
• Annual take-home pay

For our example, let’s say your take-home pay is $65,000 per year.

Step 2: Decide How Much Income You’ll Need in Retirement

Next, we want to ask:

Will you need the same amount of money in retirement that you need right now?

You may actually need less.

For example, if you have kids right now, you may be spending more on food, travel, activities, and other family expenses. By the time you retire, some of those expenses may be lower.

If you think you’ll need less money in retirement, you can reduce the amount.

If you think you’ll need more, you can increase it.

The goal is to come up with a realistic estimate of how much annual income you’ll want during retirement.

Step 3: Set Your Retirement Goal

Next, we’re going to look at your overall retirement goal.

The calculator defaults to a 5.5% withdrawal rate.

Of course, we always recommend talking with your own financial advisor to make sure your assumptions make sense for your individual situation.

You may want to look at a withdrawal rate somewhere around 4%–6%, depending on your age, retirement timeline, investments, and other factors.

If you wanted $65,000 per year in retirement and used the calculator’s 5.5% withdrawal rate, you’d need a nest egg of roughly $1.1 million.

Now we have a target.

Step 4: Enter Your Age and Current Retirement Savings

Next, enter your current age and the age you want to retire.

For example:

• Current age: 35
• Retirement age: 65

That gives you 30 years until retirement.

Then enter your existing retirement savings.

This could include money you already have in things like:

• 401(k)s
• IRAs
• SEP retirement accounts
• Brokerage accounts
• Other investments you plan to use for retirement

Let’s say you currently have $75,000 saved.

Step 5: Choose Your Expected Investment Return

Next, enter the annual investment return you expect your retirement savings to earn.

You might choose something like 9% or 10%.

Of course, investment returns vary. Some years may be much higher and others much lower. What we’re looking for here is the average annual return you want to use for your retirement planning.

This assumption can make a significant difference in your results, so choose a number that makes sense for your situation and discuss it with your financial professional.

See Your Retirement Plan

Now the calculator brings everything together.

In our example, we have:

• $65,000 in desired annual retirement income
• A 5.5% withdrawal rate
• A retirement goal of roughly $1.1 million
• $75,000 already invested
• 30 years until retirement

Based on the assumptions in the calculator, that existing $75,000 could grow to around $1.1 million over those 30 years.

That means the remaining gap is relatively small, and in this example, you’d need to contribute only around $42 per month to reach the goal.

Pretty good!

Of course, if you’re older, have less saved, want to retire earlier, or want a higher retirement income, your monthly savings goal could look very different.

That’s exactly why we built the calculator.

What If I Invest Extra Each Month?

We also have a section that allows you to ask:

What happens if I invest an extra amount every month?

Put in the additional amount you’re considering investing, and you can see how that changes your retirement projection.

This can be especially helpful if you’re deciding whether to increase your retirement contributions as your practice grows.

Savings Milestones by Age

Next, we’ll show you your savings milestones by age.

This gives you a sense of how much you should have saved at different points between now and retirement.

In our example, at age 35, the calculator shows that you should have around $80,229 saved.

If you currently have $75,000, you’d be about 93% on track.

From there, the goal would be to slowly move closer to 100% on track.

Savings Growth Forecast

The Savings Growth Forecast lets you see how your retirement savings may grow over time.

You’ll be able to compare:

• Your projected savings
• Your retirement savings goal

Rather than only seeing one big number that you need decades from now, you can see the path between where you are today and where you want to be.

Want to Plan Your Retirement in More Detail?

The final section lets you create a more detailed retirement budget.

Instead of guessing how much income you’ll need, you can estimate your future expenses across the major categories of retirement planning, including:

• Housing
• Transportation
• Food and dining
• Travel and leisure
• Health care
• Prescriptions
• Family support
• Other expenses

That gives you an estimated monthly retirement budget, which you can then use at the top of the calculator to create a more accurate retirement goal.

Creating a Clearer Financial Plan for Retirement

My hope is that this retirement planner helps relieve some of the anxiety that can come with thinking about retirement.

You don’t necessarily need to have every detail figured out today.

Instead, the goal is to understand where you currently stand, where you want to go, and what you may need to do each month to get there.

Hopefully, this gives you a clearer financial plan and some concrete next steps as you think about retirement as a therapist.