The tool performs two main calculations:

First, it aggregates the value of projected retirement expenses to present Your Expected Annual Retirement Lifestyle Expense.

Second, it calculates whether your household can expect to have an annual shortfall in retirement by subtracting total projected retirement expenses from annual projected retirement income need.

The following assumptions are made in performing these calculations.

• The gross amount of income your household receives in the form of wages, salaries, bonuses, self-employment income, social security benefits, unemployment compensation, alimony, interest, dividends, annuities, rent, veterans' benefits, workers' compensation, royalties, etc.
• The tool uses your current, annual pre-tax income to estimate the amount of income your household can expect to need in retirement. If current income is not typical of a normal year, a more representative amount of annual income should be used.

• The amount of pre-tax annual income estimated to cover projected expenses in retirement. The tool defaults to 70% of current annual income.

• The tool uses the expected retirement age and total annual income information provided by the user to determine defaults for the expense categories of Home, Everyday and Health. These pre-populated defaults are based on expense data obtained from the Bureau of Labor Statistics (BLS) 2013 Consumer Expenditure Survey and are compiled based on the ages and incomes of responders to BLS surveys over 5 quarters from Q1 2013 through Q1 2014.
• The expense data is divided into two age buckets: 55-64 years old at retirement, and 65+ years at retirement.  The age buckets are then further sub-divided into income ranges of $10,000 from $0 to $100,000 and income ranges of $20,000 from $100,000 to $200,000.
  • For expected retirement age it is assumed that all members of the household are in the same age bucket.
• Expense data will be adjusted each year by the percentage of increase or decrease determined and released by the Bureau of Labor Statistics.
• The pre-populated default values used for the Travel category are based on research of average trip prices for both international and domestic airfares, hotel prices and food expenses as of January 2020 for a single traveler. Prices are increased by 30% with the addition of a spouse or partner.
• The pre-populated default values for a Nursing Home Care Private Room ($102,200 per year) and Home Health Care Homemaker Services ($51,480 per year) are based on information obtained from the Genworth Financial 2019 Cost of Care Study.
• If the user does not change any of the defaults populated by the tool, then the tool will use the default values to calculate Your Expected Annual Retirement Lifestyle on the "Results" page.
• If the user adjusts any default value, then that new value provided by the user will be used in the calculations described above in the Calculations paragraph.

• Inflation is not accounted for in the calculations.

• All dollar amounts are shown in today's dollars.