Retirement Calculator

This calculator can help with planning the financial aspects of your retirement, such as providing an idea where you stand in terms of retirement savings, how much to save to reach your target, and what your retrievals will look like in retirement.

How much do you need to retire?

Modify the values and click the Calculate button to use

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$583.33/month

What is Retirement Planning?

Retirement planning is the process of determining retirement income goals, and the actions and decisions necessary to achieve those goals. It includes identifying sources of income, estimating expenses, implementing a savings program, and managing assets and risk.

How Retirement Savings Grow

Retirement savings grow through compounding returns. The formula for calculating the future value of your retirement savings combines your initial savings (PV) with periodic contributions (PMT):

$$FV = PV \times (1 + r)^n + PMT \times \frac{(1 + r)^n - 1}{r}$$

Where PV is your current savings, r is the annual rate of return, n is the number of years until retirement, and PMT is your periodic contribution.

Accounting for Inflation

Inflation erodes purchasing power over time. To understand what your retirement savings will be worth in today's dollars, we use this formula:

$$Real\ Value = \frac{Nominal\ Value}{(1 + i)^n}$$

Where i is the inflation rate and n is the number of years. This helps you understand the real value of your retirement income.

Key Factors in Retirement Planning

  • Current Age: The earlier you start saving, the more time your investments have to grow through compound interest.
  • Retirement Age: When you plan to retire affects both how long you have to save and how long your savings need to last.
  • Life Expectancy: Plan for a long life to avoid outliving your savings. Most financial planners recommend planning to age 90 or beyond.
  • Current Savings: Your existing retirement savings serve as the foundation of your retirement plan.
  • Monthly Contributions: Regular contributions to retirement accounts are essential for building your retirement nest egg.
  • Expected Investment Return: The rate of return on your investments has a significant impact on how your savings grow over time.
  • Inflation: Inflation reduces the purchasing power of your money over time, making it important to account for in long-term planning.
  • Income Needed in Retirement: Most financial experts suggest planning for 70-80% of your pre-retirement income in retirement.

Retirement Saving Strategies

The 4% Rule

The 4% rule suggests that you can safely withdraw 4% of your retirement portfolio in the first year of retirement, then adjust that amount for inflation each year. This provides a guideline for how much you need to save: multiply your desired annual retirement income by 25 (which is 1/0.04).

Asset Allocation

Your asset allocation—how you divide your portfolio among stocks, bonds, and other investments—should generally become more conservative as you approach retirement, but still maintain some growth potential to outpace inflation.

Catch-Up Contributions

If you're 50 or older, take advantage of catch-up contributions that allow you to contribute more to retirement accounts like 401(k)s and IRAs above the standard limits.

Tax-Efficient Accounts

Maximize tax-advantaged retirement accounts like 401(k)s, 403(b)s, and IRAs. Consider a mix of traditional (tax-deferred) and Roth (tax-free growth) accounts for tax diversification in retirement.

How to Use This Calculator

Follow these steps to get an accurate retirement projection:

  1. Enter your current age and when you plan to retire
  2. Input your current income and retirement savings
  3. Set your monthly retirement contribution amount or percentage of income
  4. Adjust assumptions (investment returns, inflation, income needed) in the Assumptions tab
  5. Add any expected additional retirement income in the Optional tab

The calculator will show you if you're on track, how much you need to save to reach your goals, and project your retirement income in both future and today's dollars.

Frequently Asked Questions

How much money do I need to retire?

A common rule of thumb is having 25 times your annual expenses saved by retirement (based on the 4% withdrawal rule). However, the exact amount depends on your desired lifestyle, expected longevity, healthcare needs, and other individual factors.

When should I start saving for retirement?

The earlier, the better. Starting early allows your money more time to grow through compound interest. Even small contributions can grow significantly over decades.

What retirement accounts should I use?

Prioritize tax-advantaged accounts like 401(k)s (especially if your employer offers matching contributions), IRAs, and HSAs (for healthcare expenses). Consider both traditional and Roth options for tax diversification.

How does inflation affect my retirement planning?

Inflation erodes purchasing power over time. If inflation averages 3% annually, $100 today will only buy about $55 worth of goods in 20 years. Your retirement planning needs to account for this by targeting investment returns that outpace inflation.

Should I pay off debt before saving for retirement?

It depends on the type of debt. Consider prioritizing high-interest debt (like credit cards) while still contributing enough to get any employer match in your retirement plan. For lower-interest debt (like mortgages), you might benefit more from the potential investment returns of retirement savings.