Retirement

Retirement Calculator

See your nest egg at retirement and the monthly income it sustains. Adjusted for inflation, with employer match and your contributions.

How the retirement calculator works

Retirement planning has two distinct phases. During the accumulation phase— the years between today and when you stop working — your contributions and investment returns compound on top of whatever you've already saved. Every dollar you put in today has decades to grow, which is why starting early matters so much. The calculator compounds your monthly contributions at a monthly rate derived from your chosen annual return, adding any employer match each year on top.

Once you retire, you enter the withdrawal phase. Your portfolio no longer receives fresh contributions; instead it must generate sustainable income for potentially 20–30 years. The calculator estimates this using the 4% rule: multiply your projected balance by 4% to get the annual amount you can withdraw without depleting the portfolio over a 30-year horizon. Divide by 12 for the monthly figure shown in the results.

“Enough to retire” means your portfolio can sustain your lifestyle without you working. The exact number depends on your planned spending, Social Security or pension income, and how conservatively you want to draw down. A common target is 25× annual expenses. This calculator helps you work backwards from that target — or forward from your current savings rate — to see whether you're on track.

The formula

The accumulation phase uses future-value-of-annuity math compounded monthly. The withdrawal phase applies the 4% rule to convert your nest egg into income:

// Accumulation phase — balance grows each month
balance = balance × (1 + monthlyRate) + monthlyContribution
// Applied each year: balance += annualEmployerMatch

// At retirement — 4% withdrawal rule
annual_income = balance × 0.04
monthly_income = annual_income / 12

// Real (inflation-adjusted) monthly income
real_monthly_income = monthly_income / (1 + inflation_rate)^years_to_retirement

The accumulation formula compounds monthly so that contributions made earlier in the year earn more than those made later. The 4% rule was established by William Bengen in 1994 and validated in the “Trinity Study” — it reflects the withdrawal rate that historically survived 30-year retirements across varied market conditions. The inflation adjustment converts the nominal future balance into today's purchasing-power terms.

Worked example

Consider a 35-year-old earning $80,000 per year with $50,000 already saved. They save 10% of income — about $667/month — and their employer matches $2,000/year. They assume a 7% annual return and plan to retire at 65.

Accumulation period: 30 years
Starting balance: $50,000
Monthly contribution: $667
Annual employer match: $2,000
Annual return: 7%

After 30 years of compounding, the projected balance at age 65 is approximately $1.1 million. Applying the 4% rule: $1,100,000 × 0.04 = $44,000/year, or roughly $3,700/monthin nominal terms. Adjusted for 3% annual inflation over 30 years, that's equivalent to about $1,500/month in today's dollars — which is why increasing your savings rate early, even by a few percentage points, has an outsized impact on retirement income.

When to use this calculator

This tool is most useful in specific planning moments:

Annual savings checkup — revisit your projection each year to confirm you're still on track as your balance grows.
After a raise — model whether increasing your contribution rate by 1–2% closes a gap or lets you retire earlier.
Comparing Roth vs Traditional — run the same numbers with different effective withdrawal tax rates to estimate which account type leaves more after-tax income.
Stress-testing early retirement — reduce the retirement age to 55 or 60 and see how much more you need to save to make it work.
Modeling catch-up contributions after 50 — raise the monthly contribution to the IRS catch-up maximum and see how much it accelerates your timeline.

Key concepts

4% withdrawal rule: The rule states you can withdraw 4% of your portfolio in year one of retirement, then adjust for inflation each subsequent year, with a high probability of the portfolio lasting 30 years. It implies a target nest egg of 25× annual expenses. Some researchers now suggest 3.3–3.8% is safer given current market valuations.
Real vs nominal return: A nominal return is the raw percentage your investments earn (e.g., 7%). A real return subtracts inflation (7% − 3% = 4% real). Planning in real returns keeps projections in today's dollars, making it easier to estimate actual purchasing power. See compound interest for how both grow over time.
Catch-up contributions (age 50+): The IRS allows workers 50 and older to contribute an extra $7,500/year to a 401(k) beyond the standard $23,500 limit (2024). IRA catch-up is an extra $1,000. These limits are indexed to inflation and adjusted periodically.
Tax-deferred vs Roth: Tax-deferred accounts (Traditional 401k, Traditional IRA) reduce your tax bill now but withdrawals are taxed as ordinary income in retirement. Roth accounts provide no upfront deduction but qualified withdrawals are completely tax-free. The best choice depends on whether your tax rate will be higher now or in retirement.

Common mistakes

Using nominal instead of real returns — projecting a 7% nominal return without accounting for 3% inflation overstates future purchasing power by a wide margin over 30 years.
Ignoring healthcare costs in retirement — the average retired couple spends $315,000+ on healthcare over retirement (Fidelity 2023 estimate). This is often the largest underestimated expense.
Overestimating Social Security — the Social Security trust fund faces projected shortfalls after 2033; benefits could be reduced 20–25% if Congress takes no action. Plan conservatively.
Not accounting for sequence-of-returns risk — a bear market in the first 5 years of retirement can permanently impair a portfolio even if long-run average returns are fine. The 4% rule accounts for this historically, but early large withdrawals amplify the risk.
Failing to increase contributions with income — if you get a 5% raise and keep contributing the same dollar amount, your savings rate falls. Automate contribution rate increases each year to keep pace with lifestyle inflation.

Frequently asked questions

How much do I really need to retire?

The standard benchmark is 25× your expected annual expenses in retirement — derived from the 4% withdrawal rule. If you plan to spend $60,000/year, you need roughly $1.5 million. Adjust downward if you expect significant Social Security or pension income. Adjust upward if you plan to retire before 65, since your portfolio needs to last longer.

Is the 4% rule still valid?

It remains a useful starting point. Research from Morningstar (2023) suggests 3.3% may be a safer withdrawal rate given current bond yields and equity valuations. The 4% rule was calibrated on historical U.S. market returns — a globally diversified portfolio may warrant a slightly different assumption. For conservative planning, model 3.5%; for a baseline, use 4%.

How does Social Security factor in?

Social Security reduces the income your portfolio needs to generate. The average benefit in 2026 is about $1,900/month. To use it in this calculator: estimate your expected Social Security benefit, subtract it from your target monthly retirement income, and use the remainder as your income goal. You can find your personalized estimate at ssa.gov.

Pre-tax vs Roth — which is better in retirement?

It depends on your tax bracket. Pre-tax (Traditional) accounts defer taxes until withdrawal, which is advantageous if you're in a high bracket now and expect a lower one in retirement. Roth accounts pay tax now and grow tax-free — better if you expect higher taxes later or want tax-free income to manage Medicare premium thresholds. Most advisors recommend holding both for flexibility.

What are catch-up contributions and are they worth it?

Once you turn 50, you can contribute an additional $7,500/year to a 401(k) (2024 limit) on top of the standard $23,500. For a 50-year-old with a 7% return and 15 years to retirement, maxing catch-up contributions adds roughly $190,000 to the projected balance at age 65. If you can afford it, they almost always accelerate retirement readiness meaningfully.

What annual return rate should I assume?

A 7% nominal return (roughly 4% real after 3% inflation) is the most commonly cited long-run average for a diversified stock/bond portfolio. Conservative planners use 5–6%; aggressive planners use 8–9%. We recommend running three scenarios — 5%, 7%, and 9% — to see a range of outcomes. The difference in projected balance over 30 years is dramatic: a $667/month contribution at 5% reaches ~$560k; at 9% it reaches ~$1.3M.

Related calculators

401(k) Calculator — maximize employer match and contribution limits Compound Interest Calculator — see how any lump sum grows over time Investment Calculator — model regular contributions with custom returns Salary Calculator — convert hourly, weekly, and annual pay

Disclaimer: This calculator provides educational projections only and does not constitute financial, tax, or investment advice. Results are based on the assumptions you enter and do not account for taxes, fees, inflation variability, or changes in your personal circumstances. Consult a qualified financial advisor before making retirement planning decisions.