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 a higher percentage to compensate for fewer years of compound growth. Many financial planners recommend accumulating 10-12 times your final annual salary by retirement age. Fidelity suggests specific milestones along the way: 1x your salary saved by age 30, 3x by 40, 6x by 50, 8x by 60, and 10x by 67. The exact amount depends on your desired retirement lifestyle, expected Social Security benefits, healthcare costs, anticipated longevity, and whether you have other income sources like pensions or rental income. Use this calculator to model different savings rates and see how they affect your projected nest egg.

What is the 4% rule and is it still valid?

The 4% rule, developed by financial planner William Bengen in 1994, analyzed historical market data from 1926 to 1992 and concluded that withdrawing 4% of your portfolio in the first year of retirement, then adjusting that dollar amount for inflation each subsequent year, would sustain your savings for at least 30 years in virtually all historical market conditions. For example, with a $1 million portfolio, you would withdraw $40,000 in year one. The rule remains a useful starting point, but some researchers now suggest a lower rate of 3.3-3.5% may be more prudent given current bond yields and market valuations. Others advocate for flexible withdrawal strategies that adjust spending based on portfolio performance rather than sticking to a rigid percentage.

Should I contribute to a 401(k) or IRA first?

The standard recommendation is a three-step approach. First, contribute enough to your 401(k) to capture the full employer match -- this is essentially free money with an immediate 50-100% return. Second, max out a Roth IRA ($7,000 in 2026, or $8,000 if age 50+) for its tax-free growth and flexible withdrawal rules. Third, return to the 401(k) and contribute up to the annual limit ($23,500 in 2026). If you are self-employed or your employer does not offer a 401(k), a SEP-IRA or Solo 401(k) provides higher contribution limits. The right order depends on your tax situation, employer match quality, and available investment options.

How does inflation impact my retirement savings?

Inflation erodes the purchasing power of your money over time and is one of the biggest risks to retirees living on fixed incomes. At 3% annual inflation, $1 today is worth only about $0.55 in 20 years and $0.40 in 30 years. This means if you need $4,000 per month today, you will need roughly $7,285 per month in 20 years to maintain the same standard of living. A sound retirement plan must account for inflation by targeting real (inflation-adjusted) returns of 4-5% rather than nominal returns, holding a portion of the portfolio in equities for long-term growth, considering Treasury Inflation-Protected Securities (TIPS), and planning for increasing withdrawal amounts each year. This calculator factors inflation into both the accumulation and drawdown phases.

What is FIRE and how does it work?

FIRE stands for Financial Independence, Retire Early. It is a movement focused on extreme savings rates (50-70% of income) and frugal living to accumulate enough wealth to retire decades before the traditional age of 65. The core principle is reaching a portfolio value equal to 25 times your annual expenses, based on the 4% rule. For example, if you spend $40,000 per year, your FIRE number is $1,000,000. Variations include LeanFIRE (frugal retirement under $40,000/year), FatFIRE (comfortable retirement over $100,000/year), and BaristaFIRE (semi-retirement with part-time work covering some expenses while investments grow). Explore the concept in detail with our FIRE calculator.

When should I start taking Social Security benefits?

You can claim Social Security as early as age 62, but your benefit will be permanently reduced by up to 30% compared to your full retirement age (67 for those born in 1960 or later). Delaying benefits past your full retirement age increases them by 8% per year up to age 70, resulting in a 24% higher monthly payment. The break-even age -- where cumulative delayed benefits exceed the total you would have received by claiming early -- is typically around 80-82. If you are in good health with a family history of longevity and have other income sources to bridge the gap, delaying benefits often makes financial sense. However, if you need the income immediately, have health concerns, or have a shorter life expectancy, claiming earlier may be the better choice. Use our Social Security calculator to estimate your optimal claiming strategy.

Retirement Calculator – Project Your Retirement Savings

Quick Answer

A retirement calculator projects whether your current savings, contributions, and expected investment return will be enough to cover your retirement expenses. A common benchmark is the 4% safe withdrawal rate, based on the Trinity Study, meaning you can withdraw 4% of your starting portfolio annually with a high chance your savings will last 30 years.

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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 Retirement Planning Works

Retirement planning is the process of determining how much money you need to accumulate during your working years so that you can maintain your desired standard of living after you stop earning a paycheck. The central goal is to build a large enough "nest egg" -- a pool of invested savings -- that generates sufficient income to cover your expenses for the rest of your life.

Every retirement plan involves two distinct phases. The accumulation phase spans your working years, during which you contribute regularly to retirement accounts like a 401(k) or IRA and benefit from compound growth. The distribution phase begins when you retire and start withdrawing from your portfolio. During this phase, your savings must continue to grow enough to outpace inflation and withdrawals.

The withdrawal rate you choose in retirement is critical. Withdraw too much too quickly and you risk running out of money. Withdraw too little and you may unnecessarily sacrifice quality of life. Research suggests that a sustainable withdrawal rate for a 30-year retirement is approximately 3.5-4% of the initial portfolio value, adjusted annually for inflation. This calculator models both phases, projecting your nest egg at retirement and estimating how many years your savings will last given your planned spending, expected investment returns, and inflation. By adjusting the inputs, you can stress-test different scenarios and find the savings rate and retirement age that give you confidence in your financial future.

The Retirement Savings Formula

The core formula behind this calculator is the future value of an annuity with an initial lump sum. It combines the growth of your existing savings with the growth of your ongoing monthly contributions:

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

Where:

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

The first term, PV(1 + r)ⁿ, represents how your existing savings grow through compound interest. The second term calculates the future value of all your monthly contributions, each compounding for the remaining months until retirement.

The 4% Rule Explained: Developed by financial planner William Bengen in 1994, the 4% rule states that you can withdraw 4% of your portfolio in the first year of retirement, then adjust the dollar amount for inflation each year, and have a high probability of not running out of money for at least 30 years. To find the nest egg you need, simply divide your desired annual retirement income by 0.04. For example, if you want $60,000 per year in retirement income, you need $60,000 ÷ 0.04 = $1,500,000. This is sometimes called the "multiply by 25" rule since 1 ÷ 0.04 = 25. Use our FIRE calculator to explore this concept in depth.

Key Retirement Terms

401(k): An employer-sponsored retirement plan that lets you contribute pre-tax dollars (or after-tax with Roth 401(k)). Many employers match a portion of your contributions. The 2026 contribution limit is $23,500, with an additional $7,500 catch-up for ages 50+. Workers aged 60-63 can contribute an extra $11,250 under the enhanced catch-up provision. Use our 401(k) calculator to model your contributions.

IRA (Individual Retirement Account): A tax-advantaged account you open on your own, independent of an employer. Traditional IRA contributions may be tax-deductible, and earnings grow tax-deferred. The 2026 contribution limit is $7,000 ($8,000 if age 50+). Explore options with our IRA calculator.

Roth vs. Traditional: Traditional accounts give you a tax deduction now but you pay taxes on withdrawals in retirement. Roth accounts use after-tax money but withdrawals in retirement are completely tax-free. Choose Roth if you expect to be in a higher tax bracket later; choose Traditional if you are in a high bracket now and expect a lower one in retirement.

Employer Match: Free money your employer contributes to your 401(k) based on your own contributions. A common match is 50% of the first 6% of salary you contribute. If you earn $80,000 and contribute 6% ($4,800), your employer adds $2,400. Not capturing the full match is leaving money on the table.

Vesting: The schedule determining when employer-matched funds become fully yours. Common schedules include immediate vesting, 3-year cliff vesting (0% until year 3, then 100%), and 6-year graded vesting (20% per year starting in year 2). Your own contributions are always 100% vested.

RMD (Required Minimum Distribution): Starting at age 73 (75 for those born in 1960 or later under SECURE 2.0), the IRS requires you to withdraw a minimum amount from Traditional IRAs and 401(k)s each year. Roth IRAs are exempt from RMDs during the owner's lifetime. Failure to take RMDs results in a 25% penalty on the amount not withdrawn.

FIRE (Financial Independence, Retire Early): A movement focused on aggressive saving (50-70% of income) and investing to achieve financial independence decades before the traditional retirement age. The target is typically 25 times annual expenses. Learn more with our FIRE calculator.

Social Security: A federal program providing retirement income based on your 35 highest-earning years. Full retirement age is 67 for those born in 1960 or later. You can claim reduced benefits at 62 or increased benefits by delaying to 70 (8% increase per year of delay). Use our Social Security calculator to estimate your benefit.

401(k) vs IRA vs Roth IRA Comparison Table

Feature	401(k)	Traditional IRA	Roth IRA
2026 Contribution Limit	$23,500	$7,000	$7,000
Catch-Up (Age 50+)	+$7,500 (ages 50-59, 64+) +$11,250 (ages 60-63)	+$1,000	+$1,000
Tax Treatment (Contributions)	Pre-tax (reduces taxable income)	Tax-deductible (income limits apply if covered by employer plan)	After-tax (no deduction)
Tax Treatment (Withdrawals)	Taxed as ordinary income	Taxed as ordinary income	Tax-free (if qualified)
Employer Match	Yes (common)	No	No
Early Withdrawal Penalty	10% before age 59½	10% before age 59½	Contributions: anytime, tax-free. Earnings: 10% before 59½
RMDs Required	Yes, starting at age 73-75	Yes, starting at age 73-75	No (during owner's lifetime)

Practical Examples

Example 1: Starting Early at Age 25

Sarah begins contributing $500/month at age 25 with $10,000 already saved. Assuming a 7% average annual return and retirement at age 65:

Monthly rate: 7% ÷ 12 = 0.5833%, n = 40 × 12 = 480 months
Growth of initial savings: $10,000 × (1.005833)⁴⁸⁰ = $163,102
Growth of contributions: $500 × [((1.005833)⁴⁸⁰ − 1) / 0.005833] = $1,317,564
Total nest egg: $1,480,666 on just $250,000 contributed ($10,000 + $500 × 480)
At a 4% withdrawal rate: $59,227/year in retirement income (before Social Security)

Example 2: Late Start at Age 40

Michael starts at 40 with $80,000 saved and contributes $1,200/month at 7% return, retiring at 67:

Monthly rate: 0.5833%, n = 27 × 12 = 324 months
Growth of initial savings: $80,000 × (1.005833)³²⁴ = $530,848
Growth of contributions: $1,200 × [((1.005833)³²⁴ − 1) / 0.005833] = $1,196,095
Total nest egg: $1,726,943 on $468,800 contributed
Michael contributed more per month but still built a strong nest egg by maximizing contributions during his peak earning years and utilizing catch-up contributions after age 50

Example 3: Couple Planning Together

Alex (35) and Jordan (33) each have a 401(k) with employer match. Combined current savings: $150,000. Combined monthly contributions: $2,000 (including employer match). Target retirement age: 62.

Using Alex's timeline (27 years): n = 324 months at 7% return
Growth of combined savings: $150,000 × (1.005833)³²⁴ = $995,340
Growth of contributions: $2,000 × [((1.005833)³²⁴ − 1) / 0.005833] = $1,993,492
Combined nest egg: $2,988,832
At a 4% withdrawal rate plus expected Social Security of $4,000/month combined, they can expect about $157,953 in annual retirement income

Retirement Savings Strategies

1. Always Capture the Full Employer Match

If your employer matches 50% of contributions up to 6% of your salary, contribute at least 6%. On an $80,000 salary, that is $4,800 from you and $2,400 from your employer -- a guaranteed 50% return on your money before any investment gains. Not contributing enough to get the full match is the single most common retirement planning mistake.

2. Increase Contributions by 1% Each Year

If saving 15% of income feels daunting, start where you can and increase your contribution rate by 1% each year. Going from 6% to 7% on an $80,000 salary is only an extra $67/month before tax. Over a career, these incremental increases compound dramatically. Many 401(k) plans offer an auto-escalation feature that does this automatically.

3. Roth Conversion Ladder

If you plan to retire early (before 59½), a Roth conversion ladder lets you access Traditional 401(k)/IRA funds without the 10% early withdrawal penalty. You convert a portion of Traditional funds to a Roth IRA each year, pay income tax on the conversion, and after a 5-year waiting period, withdraw the converted amount penalty-free. This strategy requires 5 years of living expenses from other sources during the conversion pipeline period.

4. Catch-Up Contributions After 50

Workers aged 50 and older can contribute an additional $7,500 to a 401(k) (total $31,000 in 2026) and an extra $1,000 to an IRA (total $8,000). Under the SECURE 2.0 Act, workers aged 60-63 get a super catch-up of $11,250 for 401(k) plans, bringing the total possible contribution to $34,750. These extra contributions can significantly boost your nest egg in the final stretch before retirement.

5. HSA as a Stealth Retirement Account

A Health Savings Account (HSA) offers a triple tax advantage: contributions are tax-deductible, growth is tax-free, and withdrawals for qualified medical expenses are tax-free. After age 65, you can withdraw HSA funds for any purpose (paying only income tax, like a Traditional IRA). The 2026 contribution limit is $4,300 for individuals and $8,550 for families. Since healthcare is often the largest expense in retirement, a well-funded HSA can serve as a powerful supplement to your savings strategy.

How Much Do You Need to Retire?

The table below shows the nest egg required to sustain various annual income levels in retirement using the 4% withdrawal rule. This assumes your portfolio continues to earn returns during retirement and that you adjust withdrawals annually for inflation. Social Security benefits would reduce the amount you need from your portfolio.

Desired Annual Income	Required Nest Egg (4% Rule)	Monthly Withdrawal	With $2,000/mo Social Security
$40,000	$1,000,000	$3,333	$400,000 needed from portfolio
$60,000	$1,500,000	$5,000	$900,000 needed from portfolio
$80,000	$2,000,000	$6,667	$1,400,000 needed from portfolio
$100,000	$2,500,000	$8,333	$1,900,000 needed from portfolio

These figures represent today's dollars. To account for inflation between now and your retirement date, use the compound interest calculator to project future values, or simply increase your target by approximately 3% per year for each year until retirement.

Disclaimer: This calculator is for informational purposes only and does not constitute financial, tax, or legal advice. Contribution limits, tax rules, and Social Security provisions are based on 2026 guidelines and are subject to change. Always consult a qualified financial advisor, tax professional, or legal counsel for decisions specific to your situation.