How the retirement projection works
- Growth until retirement. Your current savings and monthly contributions grow at the expected annual return (converted to an equivalent monthly rate).
- Adjust for inflation. The projected balance is divided by (1 + inflation)years to show its value in today’s money.
- Sustainable income. The balance in today’s dollars × withdrawal rate gives the yearly income your savings can reasonably support.
- Target. Your desired income ÷ withdrawal rate is the nest egg you need. The calculator also works out the monthly contribution required to reach it.
Nest egg = S × (1 + i)m + C × ((1 + i)m − 1) ÷ i
Target (today’s $) = Desired income ÷ Withdrawal rate
Target (today’s $) = Desired income ÷ Withdrawal rate
Example: At 35 you have $50,000 saved and add $800 a month. With a 7% return, by 65 you would have about $1.32 million. After 3% inflation that is worth about $542,000 in today’s dollars, supporting roughly $21,700 a year at a 4% withdrawal rate. To produce $60,000 a year you would need $1.5 million in today’s dollars — about $2,790 a month in contributions.
How to close a retirement gap
- Capture the full employer match in your 401(k) — it is an immediate return on your money.
- Increase contributions with each raise. Raising your saving rate by 1% a year is barely noticeable in your paycheck.
- Work a few more years. Each extra year adds contributions, adds growth and shortens the period your savings must last.
- Control investment costs. A 1% annual fee can reduce a 30-year balance by more than 20%.
This is a simplified projection with constant returns. Real markets fluctuate, and the order of returns near retirement matters. Consider speaking with a fee-only financial planner for a full plan.
How to use the calculator
- Enter your current age, planned retirement age and current retirement savings.
- Enter how much you contribute each month, including any employer match.
- Enter an expected annual return and inflation rate.
- Read your projected balance in future dollars and in today’s money, and the income it could support.
How much do you need?
Common rules of thumb:
- Income replacement: plan to replace about 70–80% of pre-retirement income from all sources, including Social Security.
- 4% rule: a portfolio can sustain withdrawals of about 4% of its starting value, adjusted for inflation, for 30 years in most historical periods. That means roughly 25 times the annual amount you need from savings.
- Savings milestones: some planners suggest having about 1× your salary saved by 30, 3× by 40, 6× by 50, 8× by 60 and 10× by 67.
Where to save (U.S.)
- 401(k) or 403(b): contribute at least enough to get the full employer match — it is an immediate return on your money.
- IRA or Roth IRA: tax-advantaged accounts you open yourself. Roth contributions are taxed now but grow and are withdrawn tax-free in retirement if rules are met.
- HSA: if you have a high-deductible health plan, a health savings account offers tax-free money for medical costs, which are significant in retirement.
- Catch-up contributions: from age 50, higher annual limits apply. Contribution limits change each year — check the IRS website for current figures.
Social Security
Benefits can start at 62 but are permanently reduced; full retirement age is 67 for people born in 1960 or later, and delaying to 70 increases the monthly benefit by 8% for each year after full retirement age. Your personal estimate is available at ssa.gov with a my Social Security account. Subtract expected benefits from your income needs to see how much your savings must cover.
Making the projection realistic
- Use conservative returns: a mix of stocks and bonds might average 5–7% before inflation over long periods, with no guarantee.
- Account for fees: subtract fund expense ratios and advisory fees from the expected return.
- Remember taxes: withdrawals from traditional 401(k)s and IRAs are taxed as income.
- Update every year: rerun the calculator with your actual balance and contributions.
Frequently asked questions
How much do I need to retire?
A common starting point is to divide the annual income you want from savings by a safe withdrawal rate. At 4%, $60,000 a year requires about $1.5 million (in today’s dollars). Social Security or a pension reduces the amount your savings must cover, so subtract those from your desired income first.
What is the 4% rule?
The 4% rule comes from historical U.S. market studies: withdrawing 4% of your portfolio in the first year of retirement, then adjusting for inflation, lasted at least 30 years in almost all historical periods. Retiring earlier or wanting extra safety suggests 3–3.5%.
What rate of return should I assume?
Long-term U.S. stock returns have averaged around 10% before inflation, bonds much less. A diversified portfolio is often modelled at 5–7% before inflation. Using a moderate figure and checking a pessimistic scenario gives a more reliable plan.
Why are results shown in today’s dollars?
A million dollars in 30 years will buy far less than today. Converting the projection to today’s dollars using your inflation assumption lets you compare it directly with your current cost of living.
Does this include Social Security?
No. Enter only the income you expect your savings to provide. Subtract expected Social Security or pension income from your total income need before entering it.
What return should I assume for retirement planning?
Many planners use 5–7% for a balanced or stock-heavy portfolio before inflation, or about 4–5% after inflation. Lower assumptions build in a safety margin.
What if I start saving late?
Increase contributions, use catch-up limits after 50, consider working a few years longer and delaying Social Security. Each extra working year adds savings and shortens the period you need to fund.