How much should I save for retirement?

A common guideline is to save 10-15% of your gross income for retirement starting in your 20s. If you start later, you may need to save more. Many financial planners suggest accumulating 10-12 times your final annual salary by retirement age. The exact amount depends on your desired lifestyle, expected Social Security benefits, healthcare costs, and how long you expect to live in retirement.

What is the 4% rule for retirement withdrawals?

The 4% rule is a widely cited retirement guideline suggesting you can withdraw 4% of your portfolio in the first year of retirement, then adjust that amount for inflation each subsequent year, without running out of money for at least 30 years. For example, with a $1 million portfolio, you would withdraw $40,000 in the first year. While useful as a starting point, this rule has limitations and may not suit everyone depending on market conditions and personal circumstances.

At what age should I retire?

The ideal retirement age depends on your financial readiness, health, Social Security strategy, and personal goals. The full Social Security retirement age is 67 for those born in 1960 or later. You can claim reduced benefits as early as 62 or delay until 70 for higher payments. Medicare eligibility begins at 65, which is an important consideration for healthcare coverage. Many people aim to retire between 62 and 67, but early retirement is possible with sufficient savings.

How does inflation impact my retirement savings?

Inflation erodes the purchasing power of your money over time. At 3% annual inflation, $1 today is worth only about $0.55 in 20 years. This means your retirement expenses will likely be significantly higher than they are today. A retirement plan must account for inflation by either using real (inflation-adjusted) returns or increasing withdrawal amounts each year. Historically, U.S. inflation has averaged about 3% per year.

Retirement Calculator – Project Your Retirement Savings

Current Age

Retirement Age

Current Savings ($)

Monthly Contribution ($)

Expected Return (% p.a.)

Retirement Spending / Month ($)

Inflation Rate (% p.a.)

Projected Nest Egg at Retirement

Retirement Readiness

Years Savings Will Last

Monthly Spending (Inflation-Adjusted at Retirement)

How Does a Retirement Calculator Work?

A retirement calculator helps you project how much money you will have by the time you stop working and whether your savings will sustain your desired lifestyle throughout retirement. It combines two phases of financial modeling: the accumulation phase (while you are saving) and the drawdown phase (while you are spending in retirement).

During the accumulation phase, the calculator compounds your current savings and monthly contributions at your expected rate of return until your chosen retirement age. The formula accounts for monthly compounding: 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, and n is the total number of months until retirement.

During the drawdown phase, the calculator determines how long your nest egg will last given your monthly retirement spending, adjusted for inflation. It factors in that your portfolio continues to earn returns during retirement while you withdraw funds each month. Inflation is a critical variable because it increases the cost of living every year, meaning you need more money in later years to maintain the same standard of living. A 3% inflation rate means your expenses roughly double every 24 years. Use this calculator to experiment with different savings rates, retirement ages, and spending levels to find a plan that gives you confidence in your financial future.

Formula

FV = PV(1 + r)ⁿ + PMT × [((1 + r)ⁿ − 1) / r]

Where:

FV = future value (retirement nest egg)
PV = present value (current savings)
PMT = monthly contribution
r = monthly rate of return (annual rate ÷ 12)
n = total number of months until retirement

Example Calculation

Scenario: Age 30, current savings $50,000, contributing $500/month at 7% return, retiring at 65

Step 1: Monthly rate r = 7% ÷ 12 = 0.005833, n = 35 × 12 = 420 months
Step 2: Growth of current savings = $50,000 × (1.005833)⁴²⁰ = $574,464
Step 3: Growth of contributions = $500 × [((1.005833)⁴²⁰ − 1) / 0.005833] = $898,358
Result: Total nest egg = $1,472,822 | Total contributed = $260,000

Disclaimer: This calculator is for informational purposes only and does not constitute financial, tax, or legal advice. Always consult a qualified professional for decisions specific to your situation.

Retirement Calculator – Project Your Retirement Savings

How Does a Retirement Calculator Work?

Formula

Example Calculation

Frequently Asked Questions

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