Retirement calculator

Two questions matter: what the balance will be, and what it can safely pay out. This estimates both.

Why the projection is shown twice

A balance of $1.6 million at 65 sounds transformative until you notice it is 33 years away. At 2.5% inflation, that money buys what about $710,000 buys today. Both figures are correct; only the second one is useful for deciding whether you are saving enough.

The same applies to the income line. Aim at a target expressed in today's money — what you would need per month if you retired now — and compare it against the inflation-adjusted figure rather than the headline one.

The 4% rule and its limits

The default withdrawal rate comes from research by William Bengen in 1994, later extended by the Trinity study: a retiree drawing 4% of the initial balance in year one and raising it with inflation thereafter survived every 30-year period in the US historical record, including retirements starting in 1929 and 1966.

Three caveats matter. It was based on US market history, which was unusually strong. It assumed a portfolio of roughly 50 to 75% equities, so it does not apply to a cash-heavy account. And it was built for a 30-year retirement — retiring at 55 rather than 65 pushes the sustainable rate closer to 3.3%.

Sequence risk: when the returns arrive matters

Two retirees can experience the same average return over 25 years and get completely different outcomes. The one who meets a bad market in the first five years is selling assets into a decline to fund living costs, permanently shrinking the base that has to recover. The one who meets the same decline at year 20 is largely unaffected.

This is the argument for holding two or three years of spending in cash and short bonds at the point of retirement, so that early withdrawals do not have to come out of a falling market. It is also why the years immediately before and after retirement are the ones where portfolio risk deserves the most attention.

What this calculator leaves out

State pensions and Social Security, which can cover a substantial share of a modest retirement income and reduce what the portfolio must produce.
Tax. Withdrawals from a traditional 401(k) or pension are taxed as income; Roth withdrawals generally are not. The mix changes what a given balance is worth.
Contribution growth. Most people's contributions rise with salary, which this fixed-payment model does not capture — so the projection is likely conservative on that axis.
Healthcare and long-term care, which are the largest unbudgeted risks in most retirement plans.

Common questions

How much should I be saving?

A common benchmark is 15% of gross income including any employer match, starting in your twenties. Beginning later requires more: someone starting at 40 typically needs well over 20% to reach a comparable outcome. The calculator is more useful than a rule of thumb because it uses your actual numbers.

What return should I assume?

Long-run global equity returns have been roughly 7% real, but with decades of variation. A common approach is to run the projection at 7%, 5% and 3% and check whether the plan still works at the low end. If it only works at 9%, it is not a plan.

Is the withdrawal rate a hard limit?

No, and rigid withdrawal is not how most retirees actually behave. Spending flexibly — trimming in bad years, spending more in good ones — supports a higher average rate than any fixed percentage. Several studies put a flexible strategy nearer 5% with similar failure rates.

Should I count my house?

Generally not as retirement savings, because you have to live somewhere. It matters if you plan to downsize or move somewhere cheaper, in which case count the realistic equity released rather than the full value.