1. What is a Retirement Funded Ratio Calculator?

Definition: This calculator determines the funded ratio (FR), which measures how well your assets cover your retirement liabilities.

Purpose: It helps individuals assess their retirement preparedness by comparing total assets to projected liabilities.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( FR \) — Funded ratio (dimensionless)
• \( A \) — Total retirement assets (USD)
• \( L \) — Total retirement liabilities (USD)

Explanation: The ratio shows how many times your assets cover your liabilities. A ratio of 1 means full funding, while values below 1 indicate a shortfall.

3. Importance of Funded Ratio Calculation

Details: Monitoring your funded ratio helps ensure you're on track for retirement and can identify when adjustments to savings or spending are needed.

4. Using the Calculator

Tips: Enter your total retirement assets and projected liabilities in USD. Both values must be > 0.

5. Frequently Asked Questions (FAQ)

Q1: What is a good funded ratio?
A: A ratio of 1.0 means full funding. Many planners recommend aiming for 1.1-1.3 to provide a safety margin.

Q2: What should be included in assets?
A: Include all retirement accounts, investments, pensions, and other assets you plan to use for retirement income.

Q3: How do I estimate retirement liabilities?
A: Project all future expenses including living costs, healthcare, and discretionary spending, discounted to present value.

Q4: How often should I check my funded ratio?
A: Annually is typical, but more frequently during major market changes or life transitions.

Q5: What if my ratio is below 1.0?
A: Consider increasing savings, delaying retirement, reducing spending expectations, or adjusting investments.