Retirement Calculator

1. Enter your ages. Set your current age, the age you plan to retire, and your life expectancy. The default uses age 85. The Social Security Administration estimates the average 65-year-old will live to 84-87. Using a higher number (90-92) is the safer, more conservative approach since running out of money is a greater risk than dying with money left.
2. Enter current savings and monthly contributions. Include all retirement accounts: 401k, 403b, IRA, Roth IRA, taxable brokerage. Enter the combined current balance and the total monthly amount you contribute across all accounts (including employer match).
3. Set the expected return rate. Use 7% for a stock-heavy portfolio, 5-6% for a balanced 60/40 portfolio. This is the nominal annual return before inflation. The calculator uses this rate for the accumulation phase.
4. Set monthly retirement spending. Enter your estimated monthly expenses in retirement in today's dollars. A common estimate is 70-80% of pre-retirement income. Remember Medicare premiums, long-term care, and travel costs increase in retirement.
5. Enter Social Security estimate. Log into SSA.gov for your actual Social Security estimate. The average monthly benefit is about $1,907 as of 2024. Benefits are higher if you wait until 70 (32% more than claiming at 67). Enter your estimated monthly amount.

The calculator runs in two phases: accumulation (saving until retirement) and distribution (spending in retirement).

Accumulation Phase:
Nest Egg = Current Savings × (1 + r)^months + Contributions × [(1+r)^months - 1] / r

Needed Nest Egg (4% Rule):
= (Monthly Spending - Social Security) × 12 × 25

Distribution Phase:
Monthly withdrawal from portfolio = Monthly Spending - Social Security

Example: 35-year-old with $50,000 saved, contributing $800/month at 7% annual return, retiring at 65:

Accumulation: 30 years × 12 = 360 months, r = 7%/12 = 0.583%
Nest egg at 65 ≈ $1,053,000

If spending $5,000/month with $1,500 Social Security:
Net monthly need = $3,500
Needed nest egg = $3,500 × 12 × 25 = $1,050,000

This example nearly exactly hits the 4% rule target, meaning the plan is on track for a 30-year retirement.

The 4% rule, developed from research by financial planner William Bengen in 1994, states that retirees who withdraw 4% of their portfolio in year one, then adjust for inflation each subsequent year, historically do not run out of money over a 30-year retirement. The rule implies you need 25x your annual expenses to retire safely.

Subtract Social Security from your spending need before calculating the required nest egg. If you need $5,000/month and will receive $1,800/month from Social Security, your portfolio only needs to cover $3,200/month: a required nest egg of $960,000 instead of $1,500,000.

Some advisors now recommend a 3.5% withdrawal rate for retirements longer than 30 years or portfolios with conservative allocations, which implies a nest egg of 28-29x annual spending.