Retirement Calculator

What is Retirement Calculator?

Retirement planning requires projecting two numbers: how much you will accumulate by retirement, and how much you need. This calculator handles both. Accumulation uses the future value of an annuity formula: FV = PV × (1 + r)^n + PMT × [(1 + r)^n − 1] / r, where PV is your current savings, PMT is your monthly contribution, r is the monthly return rate (annual rate ÷ 12), and n is the number of months until retirement. This is the same formula used by financial planning software and the Consumer Financial Protection Bureau's retirement planning tools. The retirement income target is based on the widely cited 4% safe withdrawal rate, originally derived from William Bengen's 1994 research (later validated and refined by the Trinity Study). The rule: a portfolio invested in a mix of stocks and bonds can sustain annual withdrawals of 4% of the initial balance (adjusted for inflation) for at least 30 years. This means the nest egg needed = desired annual retirement income ÷ 0.04, or equivalently, 25 × desired annual income. For $60,000/year, you need $1.5 million. The 4% rule was calibrated on historical US market data from 1926–1994. More recent research (including Morningstar's 2021 analysis) suggests 3.3%–3.5% may be more appropriate for new retirees with 30+ year horizons at current valuations, meaning 28–30× desired annual income rather than 25×.

How to Use

1. Enter your current age and target retirement age. The gap between them determines how many years of compounding you have.
2. Enter your current retirement savings — the total value of your 401(k), IRA, and other investment accounts that will fund retirement.
3. Enter your monthly contribution — the total amount you are adding each month across all retirement accounts.
4. Set the expected annual return rate. 7% is a common estimate for a stock-heavy portfolio in real (inflation-adjusted) terms over long horizons. If using nominal return, use 9%–10% for stocks and adjust the income replacement number separately for inflation.
5. Enter your current annual income and income replacement percentage. Most financial planners recommend 70%–80% of pre-retirement income. If you will have significant Social Security income, subtract that before entering the replacement target.
6. Click Calculate to see projected savings, the nest egg target, shortfall or surplus, and whether you're on track.

Tips & Best Practices

• The IRS 2024 contribution limits are $23,000 for 401(k) (or $30,500 if age 50+) and $7,000 for IRA (or $8,000 if age 50+). These represent the maximum tax-advantaged savings available. Source: IRS Notice 2023-75.
• Social Security replaces approximately 40% of average pre-retirement earnings for workers retiring at full retirement age (67 for those born in 1960 or later). Create a free account at ssa.gov/myaccount to see your personalized benefit estimate.
• Increasing your contribution rate by just 1% of income per year — for example, whenever you get a raise — can substantially close a savings gap without feeling the pinch, due to the lifestyle inflation effect.
• At age 73, IRS-required minimum distributions (RMDs) begin for traditional 401(k) and IRA accounts, regardless of whether you need the money. This does not apply to Roth accounts. Source: SECURE 2.0 Act (Pub. L. 117-328), which raised the RMD age from 72 to 73.
• Healthcare is typically the largest variable in retirement spending estimates. Fidelity Investments estimates a retired couple age 65 in 2024 will need approximately $330,000 to cover healthcare costs in retirement, not including long-term care.

Frequently Asked Questions

Real-world Examples

Current age:           42
Retirement age:        67
Years to retirement:   25 (n = 300 months)
Current savings:       $120,000
Monthly contribution:  $1,500
Annual return:         7% (r = 0.005833/month)
Annual income:         $100,000
Replacement target:    80% = $80,000/year

Accumulation formula:
FV = $120,000 × (1.005833)^300 + $1,500 × [(1.005833)^300 − 1] / 0.005833

Growth factor (1.005833)^300 = 5.7918

Current savings growth:
$120,000 × 5.7918 = $695,016

Contributions growth:
$1,500 × (5.7918 − 1) / 0.005833 = $1,500 × 821.0 = $1,231,500

Total projected savings: $1,926,516

Retirement target (4% rule):
$80,000 ÷ 0.04 = $2,000,000

Shortfall: $2,000,000 − $1,926,516 = $73,484

To close gap: increase contribution by ~$55/month
or delay retirement by 6 months

Source: Future value annuity formula;
4% rule (Bengen 1994 / Trinity Study);
IRS Notice 2023-75 (contribution limits)

Related Tools