Retirement Calculator
Calculate how much you need to retire. Enter your current savings, monthly contributions, expected return, and retirement age to project your nest egg and
Reviewed by Sahil, Senior Finance & Tax Editor · Editorial policy
Retirement Calculator Formula
FV = PV(1 + r/12)^(12t) + PMT × [(1 + r/12)^(12t) - 1] / (r/12)
Where FV = Future Value at retirement, PV = Present Value (current savings), r = Annual expected return rate (decimal), t = Years until retirement, PMT = Monthly contribution. The 4% rule income is calculated as FV × 0.04 / 12 for monthly income. Inflation-adjusted value divides the future value by (1 + inflation)^t.
Retirement Calculator — Worked Examples
Example 1: Starting at 30 with Moderate Savings
Problem:A 30-year-old has $50,000 saved and contributes $500/month at 7% return until age 65. Inflation is 3%. What can they expect at retirement?
Solution:Years to retirement: 65 - 30 = 35 years\nFV of $50,000: $50,000 x (1.005833)^420 = $50,000 x 11.42 = $571,149\nFV of $500/month: $500 x ((1.005833^420 - 1) / 0.005833) = $500 x 1,787.66 = $893,830\nTotal: $571,149 + $893,830 = $1,464,979\n4% rule annual income: $1,464,979 x 0.04 = $58,599\nInflation-adjusted value: $1,464,979 / (1.03^35) = $520,900
Result:Retirement Savings: $1,464,979 | Monthly Income (4% rule): $4,883 | Inflation-Adjusted: $520,900
Example 2: Late Start at 45
Problem:A 45-year-old has $100,000 saved, contributes $1,000/month at 7% return until age 65. Inflation is 3%.
Solution:Years to retirement: 65 - 45 = 20 years\nFV of $100,000: $100,000 x (1.005833)^240 = $100,000 x 4.039 = $403,873\nFV of $1,000/month: $1,000 x ((1.005833^240 - 1) / 0.005833) = $1,000 x 520.93 = $520,927\nTotal: $403,873 + $520,927 = $924,800\n4% rule annual income: $924,800 x 0.04 = $36,992\nInflation-adjusted value: $924,800 / (1.03^20) = $512,049
Result:Retirement Savings: $924,800 | Monthly Income (4% rule): $3,083 | Inflation-Adjusted: $512,049
Retirement Calculator — Frequently Asked Questions
What is the 4% rule for retirement withdrawals?
The 4% rule is a retirement planning guideline developed by financial planner William Bengen in 1994. It states that retirees can withdraw 4% of their portfolio in the first year of retirement, then adjust that amount for inflation each subsequent year, with a very low probability of running out of money over a 30-year retirement period. For example, with a $1 million portfolio, you would withdraw $40,000 in year one. If inflation is 3%, you would withdraw $41,200 in year two. The rule assumes a diversified portfolio of roughly 50-75% stocks and 25-50% bonds. While widely used, critics note that it was based on historical US market returns, may be too conservative in strong markets, and does not account for variable spending patterns that most retirees actually follow.
How does inflation affect my retirement savings?
Inflation erodes the purchasing power of your money over time, which is critical for retirement planning since your savings may need to last 20-30+ years. At 3% annual inflation, $100 today will have the purchasing power of only $55 in 20 years and $41 in 30 years. This means that if you retire with $1 million, you would need nearly $2.5 million in 30 years to maintain the same lifestyle. To combat inflation, your retirement portfolio should include growth assets like stocks and real estate that historically outpace inflation. Treasury Inflation-Protected Securities (TIPS) and I-bonds also provide direct inflation protection. When planning, always consider your real (inflation-adjusted) rate of return, not just the nominal return.
When should I start saving for retirement?
The best time to start saving for retirement is as early as possible, ideally in your 20s when you begin earning income. Starting early gives you the enormous advantage of compound interest working over decades. Consider this: saving $300/month starting at age 25 at a 7% return yields approximately $791,000 by age 65. Waiting until age 35 to start the same savings produces only about $366,000 — less than half, despite only a 10-year difference. If you are starting late, do not be discouraged — saving aggressively now is still far better than not saving at all. Maximize employer 401(k) matches first (it is free money), then contribute to IRAs and additional retirement accounts. Those over 50 can take advantage of catch-up contribution limits to accelerate their savings.
What rate of return should I expect for retirement planning?
For long-term retirement planning, most financial advisors suggest using a 6-8% average annual return before inflation, or 3-5% after inflation. The S&P 500 has historically returned about 10% annually before inflation and roughly 7% after inflation over long periods. However, a diversified retirement portfolio typically includes bonds and other lower-return assets, bringing the blended average down to 6-8%. When you are far from retirement (20+ years away), you can use the higher end of the range since your portfolio will likely be more stock-heavy. As you approach retirement, shift to more conservative estimates of 4-6% as your allocation moves toward bonds. Always run scenarios with different return assumptions to stress-test your retirement plan and prepare for less favorable market conditions.