Living Life Calculator From Northwestern Mutual

What is Living Life Value?

Living Life Value is a financial metric that estimates the total amount of money you'll need to maintain your current lifestyle throughout your retirement years. It considers factors such as your current income, savings, expected expenses, and the duration of your retirement.

The concept is based on the principle that your financial needs in retirement should match or exceed your current lifestyle. Northwestern Mutual's approach incorporates several key components to calculate this value:

• Current annual income
• Current savings and investments
• Expected annual expenses in retirement
• Retirement duration
• Inflation rate
• Expected return on investments

Why It Matters

Calculating your Living Life Value helps you determine how much you need to save and invest to maintain your desired lifestyle in retirement. It provides a financial target to work toward and helps you make informed decisions about your savings and investment strategies.

How to Use This Calculator

Using this calculator is straightforward. Follow these steps:

1. Enter your current annual income in the designated field
2. Input your current savings and investments
3. Estimate your expected annual expenses in retirement
4. Specify your expected retirement age and life expectancy
5. Enter your expected inflation rate and investment return
6. Click the "Calculate" button to generate your Living Life Value

Example Calculation

Let's look at an example to illustrate how the calculator works. Suppose you have:

• Current annual income: $75,000
• Current savings: $100,000
• Expected annual expenses in retirement: $50,000
• Retirement age: 65
• Life expectancy: 90
• Inflation rate: 3%
• Expected investment return: 7%

Using these inputs, the calculator would estimate your Living Life Value as approximately $1,250,000. This means you would need to accumulate about $1.25 million to maintain your current lifestyle for the next 25 years of retirement.

Interpreting Your Results

Your Living Life Value provides a financial target to work toward. Here's how to interpret the results:

• If your current savings are below the calculated value: You may need to increase your savings rate or find ways to reduce your expenses to reach your financial goal.
• If your current savings exceed the calculated value: You're on track to maintain your desired lifestyle in retirement. Consider whether you could allocate some of your savings to other financial goals.
• If the calculated value seems unrealistic: Review your inputs to ensure they accurately reflect your financial situation and goals. Consider consulting with a financial advisor for personalized advice.

Next Steps

Based on your Living Life Value calculation, consider these next steps:

1. Create a detailed savings and investment plan to reach your target
2. Review your retirement income sources and social security benefits
3. Consider insurance products that can supplement your retirement income
4. Regularly review and adjust your financial plan as your circumstances change