Retirement calculator
Enter your ages, your savings and the income you want to see how long your savings last. Returns and inflation are yours to set, and the income you want keeps up with inflation.
This answer is for the example values in the boxes above. Age 35, retiring at 65, $50,000 saved and $800 a month, $3,000 a month wanted, returns 6.5% and 4.5%. Change the boxes to see your own answer.
The income you want is stated at today's prices, grows with inflation until you retire and keeps rising with inflation each year after. Social Security, pensions and taxes are not in it.
The returns are guesses, and a market does not pay the same return every year.
How it works
In the first stage the calculator grows your savings, with your monthly contributions, at the return that you expect before you retire. Each month the savings earn one twelfth of the yearly return, and each contribution goes in at the end of the month. This stage stops on the day you retire. The income that you want is stated at today’s prices, so it is raised with inflation up to that day.
In the second stage the savings are drawn down month by month. Each month the balance earns one twelfth of the yearly return that you expect after you retire, and then the income is taken out. The income rises with inflation each year. The calculator says in which month the savings run out, or what is left at the age that you plan for.
It also finds the first-year income that would use the savings up exactly at that age. That is the income they could pay, and it is shown at today’s prices.
A worked example
A person of 35 has $50,000 saved and adds $800 a month until 65, at a return of 6.5 percent. At 65 the savings are $1,234,532.37. The person wants $3,000 a month at today’s prices, which at 2.5 percent inflation is $6,292.70 a month at 65, drawn from savings that earn 4.5 percent.
The savings last 242 months, which is until age 85 and 2 months. To reach 95 they could pay $2,211.73 a month at today’s prices.
Two changes help. With $1,200 a month saved instead of $800, the savings reach 95 with $9,536.26 left. Retiring at 67 instead of 65 lets them pay the income for 272 months, which is 30 more.
What it leaves out
Social Security, pensions and taxes are not in it, and neither are fees. A fixed return is a simplification. Markets do not pay the same return every year, and a bad year just after you retire matters more than the average. Treat the answer as a way to compare plans and not as a promise.
Questions
How much do I need to retire?
It depends on the income you want and the years you need it. Enter the income at today’s prices, and the calculator shows how long your savings last. Social Security and pensions are not in it, so enter only the income that must come from savings.
How is the balance at retirement worked out?
Each month the balance earns one twelfth of the yearly return, and your contribution is added at the end of the month. Starting with $50,000 and adding $800 a month at 6.5% for 30 years gives $1,234,532.37.
Why does the income I want grow?
Prices rise, so the same income buys less each year. $3,000 a month at today’s prices is $6,292.70 a month in 30 years at 2.5% inflation, and the income goes on rising with inflation each year after you retire.
What return should I enter?
A guess that you are comfortable with. A lower return for the years after you retire is common, because savings are often moved to safer holdings. Try several returns to see how much the result changes.
What changes the result most?
Change one number at a time. In the example, $400 more saved each month makes the savings reach 95 with $9,536.26 left, and retiring at 67 instead of 65 lets them pay the income for 30 more months.
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