Retirement Calculator

Retirement planning is one of the most important financial tasks you will ever undertake, yet it is often postponed or misunderstood. Our Retirement Calculator is designed to demystify the process, helping you determine how much you need to save, whether you are on track to meet your goals, and what adjustments you might need to make. This tool transforms abstract future worries into concrete, actionable numbers that empower you to take control of your financial destiny.

To use the calculator, start by entering your current age and your desired retirement age. Most people plan to retire between sixty-two and sixty-seven, though this varies based on personal circumstances, health, and career demands. Next, input your current retirement savings across all accounts—this includes 401(k) plans, IRAs, Roth IRAs, pension values, and any other dedicated retirement funds. Do not include your primary residence or emergency savings unless you plan to downsize or use them for retirement income.

Your expected annual retirement expenses are crucial. Many financial planners use the eighty percent rule, suggesting you will need about eighty percent of your pre-retirement income to maintain your lifestyle. However, this varies widely. Some retirees spend less because their mortgage is paid off and they no longer commute to work. Others spend more on travel, hobbies, and healthcare. Be realistic and generous with this estimate—it is better to oversave than undersave.

Life expectancy is another critical input. While none of us knows exactly how long we will live, planning to age ninety or ninety-five is prudent, especially given advances in healthcare. If longevity runs in your family or you maintain excellent health, consider planning even longer. Running out of money in your eighties or nineties is a devastating scenario that proper planning can prevent.

The expected rate of return on your investments significantly impacts your retirement readiness. Historically, a diversified portfolio of stocks and bonds has returned seven to ten percent annually before inflation. However, as you approach retirement, most advisors recommend shifting to more conservative investments, which may yield four to six percent. Our calculator lets you model different return scenarios to see how market performance affects your nest egg.

Inflation is the silent thief of purchasing power. At three percent annual inflation, prices double approximately every twenty-four years. This means that if you retire at sixty-five and live to ninety, the cost of living will nearly double during your retirement. Our calculator factors in inflation to show you the real purchasing power of your savings over time, ensuring your plan accounts for rising costs.

Social Security benefits provide a foundation for many American retirees, but they are not sufficient alone. The average Social Security benefit in 2024 is around eighteen hundred dollars per month, which replaces only about forty percent of pre-retirement income for average earners. Our calculator helps you understand how Social Security fits into your overall retirement income strategy and how much additional savings you need to bridge the gap.

The calculator also demonstrates the power of starting early. Thanks to compound interest, someone who starts saving at age twenty-five needs to save far less each month than someone who starts at forty to reach the same retirement goal. Even if you are starting late, the calculator shows you what is possible with aggressive saving and smart investing. It is never too late to improve your retirement outlook.

Healthcare costs are a major wildcard in retirement planning. Medicare covers many expenses for those over 65, but it doesn't cover everything. You will still have premiums, deductibles, and copays. Additionally, long-term care—such as assisted living or nursing home care—is generally not covered by Medicare and can cost over $100,000 per year. Factoring in a 'healthcare buffer' in your savings goal is a wise strategy.

Consider your withdrawal strategy carefully. The '4% Rule' suggests you can withdraw 4% of your portfolio in the first year of retirement and adjust for inflation thereafter, with a high probability of your money lasting 30 years. However, market volatility can impact this. 'Sequence of Returns Risk' refers to the danger of a market crash early in your retirement. If your portfolio drops 20% just as you start withdrawing, your money may run out much faster. Having a cash cushion of 1-2 years of expenses can help you ride out market downturns without selling stocks at a loss.

Tax diversification is another advanced strategy. By having money in different 'buckets'—Taxable (brokerage), Tax-Deferred (Traditional IRA/401k), and Tax-Free (Roth IRA/401k)—you can control your tax bracket in retirement. For example, you might withdraw just enough from your Traditional IRA to fill the lower tax brackets, and then pull from your Roth IRA for additional income tax-free.

Finally, think about estate planning. If your goal is to leave a financial legacy to your children or a charity, you will need to save more than just what is required for your own living expenses. Our calculator helps you see if there will be a surplus at the end of your plan.

Key Benefits:

• Calculate total retirement savings needed for your lifestyle
• Determine if you are on track to meet retirement goals
• See how much to save monthly to reach your target
• Factor in Social Security benefits and pensions
• Account for inflation and investment returns
• Model different retirement ages and scenarios
• Understand the impact of starting early versus late
• Plan for healthcare costs and longevity
• Learn about withdrawal strategies like the 4% Rule
• Consider tax diversification and estate planning