Retirement Savings Calculator
Project your retirement nest egg and estimate monthly income in retirement based on current savings, monthly contributions, expected annual return, and inflation rate.
Frequently Asked Questions
How much should I save for retirement — what is the "enough" target?
The most widely cited rule is the 25× Rule (from the 4% Safe Withdrawal Rate): multiply your desired annual retirement income by 25 to get your target nest egg. Example: you want $60,000/year in retirement → target $60,000 × 25 = $1,500,000. This assumes a 4% annual withdrawal rate, which historical data (Bengen 1994, Trinity Study) shows survives 30-year retirements 95%+ of the time with a 50–75% equity portfolio. Fidelity benchmarks by age: 1× salary by 30, 3× by 40, 6× by 50, 8× by 60, 10× by 67. Vanguard and T. Rowe Price suggest slightly higher targets of 11–12× final salary. Social Security typically replaces 30–40% of pre-retirement income, so factor in your estimated benefit (available at SSA.gov) when determining how much your portfolio needs to provide.
What annual return should I assume for my retirement projections?
Return assumptions significantly impact projections. Common benchmarks: US stock market (S&P 500) — historical average ~10% nominal, ~7% real (after ~3% inflation) over long periods. Balanced portfolio (60% stocks / 40% bonds) — ~7–8% nominal, ~4–5% real. Conservative portfolio (40/60) — ~5–6% nominal. Retirement planning best practices: Use real (inflation-adjusted) returns rather than nominal to avoid overstating purchasing power. Conservative projections use 5–6% nominal for financial planning. Target-date funds typically assume 6–7% for long-horizon projections. Never assume that recent exceptional returns (e.g., 2019–2021 bull market) will continue indefinitely. The sequence of returns matters enormously near retirement — a major downturn in the 5 years before or after retirement can dramatically reduce portfolio longevity even if long-run average returns are fine.
What is the difference between a 401(k), IRA, and Roth IRA for retirement savings?
These are the three most common US retirement account types. 401(k) — employer-sponsored, pre-tax contributions (traditional) or after-tax (Roth 401k). 2024 contribution limit: $23,000 ($30,500 if age 50+). Employer matching is essentially free money — always contribute at least enough to capture the full match. Traditional IRA — individual account, pre-tax contributions (if income-eligible for deduction). 2024 limit: $7,000 ($8,000 if 50+). Roth IRA — individual account, after-tax contributions, tax-free growth and withdrawals in retirement. Same $7,000 limit. Income limits apply: 2024 phase-out at $146,000–$161,000 (single), $230,000–$240,000 (married). Strategy: max the 401(k) match → max Roth IRA → max 401(k). Roth accounts are particularly valuable for younger savers in lower tax brackets who expect higher tax rates in retirement.
How does compound interest accelerate retirement savings over time?
Compound interest is the mechanism by which returns earn returns, and time is its most powerful ingredient. Example — investing $500/month at 7% annual return: Starting at 25: 40 years of growth → $1,310,000 at 65. Starting at 35: 30 years → $567,000 at 65. Starting at 45: 20 years → $222,000 at 65. The 25-year-old accumulates 5.9× more than the 45-year-old despite only paying in 2× as long — that is the compounding effect. Einstein allegedly called compound interest "the eighth wonder of the world." The Rule of 72: divide 72 by your annual return rate to find how many years it takes to double your money. At 7%, money doubles every ~10.3 years. At 10%, every 7.2 years. Starting early and keeping fees low (each 1% fee roughly costs 25% of your final portfolio over 30 years) are the two most actionable levers.
How much can I safely withdraw each month in retirement?
The 4% Safe Withdrawal Rate (SWR) is the standard starting point: withdraw 4% of your nest egg in year 1, then adjust annually for inflation. On $1,000,000, that is $40,000/year ($3,333/month). Research basis: Bengen (1994) showed 4% survived all 30-year periods from 1926–1993 with a diversified portfolio. The Trinity Study (1998) confirmed ~95% success rates. However, the 4% rule faces scrutiny in today's low-bond-yield environment — some planners now recommend 3–3.5% for 40-year retirements or portfolios with more bonds. Adjustments: 4.5–5% may be appropriate for shorter retirements (20 years), flexible spending (able to cut back), or high equity allocations. 3–3.5% is safer for early retirees (40-year horizon), conservative portfolios, or retirees without Social Security. Also factor in: Social Security income (reduces portfolio withdrawal needs), required minimum distributions (RMDs start at age 73 under SECURE 2.0), and healthcare cost inflation (typically 5–6%/year vs general CPI).