Retirement Calculator

Two questions, answered separately

Retirement planning collapses two different problems into one word. The first is accumulation: what do current savings and contributions grow to by the time you stop working. The second is decumulation: does that pile, drawn down against rising costs for twenty-five years, actually last.

Most calculators answer the first and imply the second with a rule of thumb. This one runs both, and shows the year the money would run out if it does.

Why the calculation starts from spending, not income

Retirement costs what your life costs, not what your job pays. Two people earning $120,000 who spend $60,000 and $110,000 respectively need very different amounts, and the second has been saving far less to build it with.

So the input is today's spending, scaled by a replacement percentage. The common assumption is that retirement costs a bit less — no commuting, no retirement saving, often no mortgage — but healthcare tends to move the other way, and the first years of retirement are frequently the most expensive. Eighty percent is a starting point, not a finding.

Inflation is the part that surprises people

Spending $72,000 today at 80% replacement means needing $57,600 a year in today's money. Twenty-five years from now, at 2.5% inflation, that same standard of living costs about $107,000 a year — and it keeps climbing through a retirement that may run another twenty-five.

Every figure here is inflated to the year it applies to. The withdrawal in the drawdown table rises each year for the same reason, because a fixed withdrawal that looked comfortable at 67 buys noticeably less at 85.

How the target nest egg is worked out

Take the first year of retirement spending, subtract Social Security, pensions, and anything else guaranteed, and what is left is the gap the portfolio has to cover. The target is the present value of that gap, growing with inflation, across the retirement years, discounted at the post-retirement return:

required = gap ÷ r × (1 − (1 + r)−years), where r is the return net of inflation

That real return is what makes the arithmetic honest. A 4.5% return against 2.5% inflation is a real return of just under 2%, and using the nominal rate against an inflating withdrawal would overstate what the portfolio can support by a wide margin.

Social Security is your figure, not ours

This calculator does not estimate Social Security benefits. The formula depends on your highest 35 years of indexed earnings, your full retirement age, and when you actually claim — none of which can be inferred from the inputs on this page.

Your own estimate is on your Social Security statement at ssa.gov, which shows what you would receive at several claiming ages. Enter that annual figure and the projection uses it. Leaving it blank produces a portfolio-only answer, which is a defensible conservative choice.

A worked example

Age 42, retiring at 67, planning to 92. $240,000 saved, contributing $18,000 plus $5,500 from an employer, 6.5% before retirement and 4.5% after, 2.5% inflation, spending $72,000 today at 80% replacement, with $32,000 of Social Security.

Savings project to roughly $2.47 million by 67 — about $1.27 million in today's money. First-year retirement spending is around $109,000 in the money of that year, against $32,000 of Social Security, leaving a gap of $77,000 for the portfolio to cover. The target nest egg for that gap over 25 years is roughly $1.55 million, so the plan finishes with close to $920,000 of headroom and the drawdown never exhausts the portfolio.

Change one input — retire at 62 instead of 67 — and the picture shifts twice over: five fewer years of contributions and compounding, and five more years of withdrawals. That single change moves the answer more than any plausible adjustment to the assumed return.

On the withdrawal rate

The withdrawal rate field is a planning assumption and nothing more. The much-quoted 4% figure came from one study of a particular historical period, a particular portfolio, and a 30-year horizon; later work has argued both directions, and none of it is a government standard or a guarantee.

Treat it as a dial. Set it to 3% and see whether the plan still works; that is a more useful exercise than adopting any single number as fact.

What this does not model

• Sequence-of-returns risk. A steady return hides the largest danger in retirement: a bad market in the first few years, when withdrawals are locking in losses. Two portfolios with the same average return can end very differently.
• Tax. Withdrawals from traditional accounts are taxable and Roth withdrawals generally are not. Part of Social Security may be taxable too. None of that is applied here.
• Required minimum distributions. Not modelled.
• Healthcare and long-term care. Included only to the extent your spending figure includes them. Long-term care is the single largest uncosted risk in most plans.
• Variable spending. Real retirement spending is rarely flat; it often falls in the middle years and rises again late.

For the account-level detail behind the savings figure, see the 401(k) calculator and the investment calculator. See our methodology for how these tools are built and tested.