Retirement Calculator

About the Retirement Calculator

Retirement planning answers two questions: how much do I need to retire, and how much should I save now? The answers depend on your spending, life expectancy, expected returns, Social Security, and pension if any. This page covers the framework and the assumptions that move the result most.

The Formula

Nest egg needed ≈ Annual retirement spending × 25 (the 4% withdrawal rule). Required monthly savings = (Goal − Current savings × (1+r)^years) ÷ FV factor, where FV factor accounts for compounding contributions.

Worked Example

$60,000/year retirement spending → nest egg of $1.5M (60,000 × 25). At 35 with $50,000 saved, 30 years to retirement, 7% return: current $50,000 grows to ~$380,000. Need $1.12M more from contributions. Required monthly savings ≈ $1,100.

The 4% rule

Withdrawing 4% of your portfolio in year one, then adjusting that dollar amount for inflation annually, gave a 95%+ success rate over 30-year retirement periods in historical backtests. For longer retirements (40+ years) or in low-yield environments, 3.5% is more conservative.

Social Security: when to claim

Claim early (62): permanently reduced by 25-30%. Full retirement age (66-67): unreduced benefit. Delayed (70): bonus of 8%/year deferred, so 32% higher. The breakeven for delayed claiming is roughly age 80. Healthy spouses with longer expected lifespans should usually delay; singles with shorter life expectancy may claim earlier.

Pre-tax vs post-tax retirement spending

Traditional 401(k) and IRA withdrawals are taxed as ordinary income. If your retirement spending is $60,000 and your tax rate is 15%, you need to withdraw about $71,000 to net $60,000. Roth accounts withdraw tax-free. Most people benefit from a mix.

Common Mistakes

• Planning for only 20 years of retirement when many people live 30+ years.
• Forgetting healthcare. Medicare kicks in at 65; pre-65 retirement requires private coverage or COBRA.
• Underestimating inflation. 3%/year over 25 years more than doubles costs.
• Pulling Social Security at 62 'because you might not live to break even'. Most people live well past the break-even.

Frequently Asked Questions

Can I retire on $1 million?
At 4% withdrawal: $40,000/year. Combined with Social Security ($24,000 avg), gives $64,000 — comparable to a $80,000 pre-retirement salary after deducting savings.

Should I pay off my mortgage before retiring?
Mathematically often not (low rate vs market returns), but eliminating the largest monthly bill dramatically reduces retirement cash flow needs.

This calculator is for informational purposes only and does not constitute financial, tax, or legal advice. Consult a licensed professional before making significant financial decisions.