Retirement Calculator — How Much Do You Need to Retire?
How This Retirement Calculator Works
This calculator solves the two-phase retirement problem. In the accumulation phase, your savings grow through compounding returns and monthly contributions from today until retirement. In the drawdown phase, you withdraw monthly from the portfolio while it continues to earn a (typically lower) return.
The key output is whether your projected nest egg generates enough sustainable income to last from retirement through your life expectancy — with or without Social Security supplementing the withdrawals.
The Accumulation Formula
The future value of your current savings plus monthly contributions:
FV = P × (1 + r)n + C × [(1 + r)n − 1] / r
| Variable | Meaning | Example (30yr old, retire at 65) |
|---|---|---|
| P | Current savings | $50,000 |
| C | Monthly contribution | $500 |
| r | Monthly rate (annual ÷ 12) | 7% ÷ 12 = 0.5833% |
| n | Accumulation months | 35 yrs × 12 = 420 months |
| FV | Nest egg at retirement | ~$1,164,000 |
Step-by-Step Worked Example
The 4% Rule and Safe Withdrawal Rates
The 4% rule is the most cited guideline in retirement planning. Based on the "Trinity Study" (Bengen, 1994; updated by Cooley, Hubbard, Walz), it found that withdrawing 4% of an initial portfolio balance (adjusted annually for inflation) historically survived 30 years with a 95%+ success rate across all 30-year periods from 1926-1994.
The rule is a starting point, not a guarantee. Its limitations:
- It assumes a 50-75% equity / 25-50% bond allocation
- A 30-year horizon was the assumption — retirees now often plan for 35-40 years
- Low bond yields in the 2010s-2020s led many planners to recommend 3-3.5% instead
- Sequence of returns risk (retiring into a bear market) is the biggest threat
How Much to Save Each Month
A standard rule of thumb is to save 15% of gross income for retirement (including any employer match). For someone starting at 30 earning $70,000, that is $875/month. If you start later, the required savings rate is higher because you have fewer compounding years.
| Start Saving at Age | Monthly Needed for $1M at 65 | Total Invested | Growth from Compounding |
|---|---|---|---|
| 25 (40 yrs) | $339/mo | $162,720 | $837,280 |
| 30 (35 yrs) | $500/mo | $210,000 | $790,000 |
| 35 (30 yrs) | $762/mo | $274,320 | $725,680 |
| 40 (25 yrs) | $1,202/mo | $360,600 | $639,400 |
| 45 (20 yrs) | $1,993/mo | $477,720 | $522,280 |
| 50 (15 yrs) | $3,600/mo | $648,000 | $352,000 |
All figures assume 7% annual return. Starting 5 years later roughly doubles the required monthly savings.
Retirement Account Types
Where you save matters nearly as much as how much you save. The main tax-advantaged account types in the US:
- 401(k) / 403(b) — employer-sponsored, $23,500 limit (2025), $31,000 if 50+. Contributions pre-tax; withdrawals taxed as income. Many employers match 50-100% of first 3-6%.
- Roth 401(k) — same limits as traditional 401(k), but contributions are after-tax and all growth is tax-free in retirement.
- Traditional IRA — $7,000 limit (2025), $8,000 if 50+. Deductible if no workplace plan; otherwise income limits apply. Taxed at withdrawal.
- Roth IRA — Same limits as IRA. Contributions after-tax; growth and qualified withdrawals tax-free. Income limits: phases out at $150K-$165K (single) / $236K-$246K (married) in 2025.
- SEP-IRA / Solo 401(k) — For self-employed. SEP limit is 25% of compensation up to $70,000 (2025).
Frequently Asked Questions
How much money do I need to retire?
A common rule of thumb is the 25x rule: multiply your expected annual spending in retirement by 25. This is derived from the 4% safe withdrawal rate — the historically supported rate at which a portfolio can sustain 30 years of withdrawals. If you need $60,000/year, you need $1.5 million. Social Security reduces the amount you need from savings. At $1,500/month SS, you only need to fund $42,000/year from savings, requiring about $1.05 million.
What is the 4% rule for retirement?
The 4% rule, derived from the 1994 "Trinity Study," states that a portfolio invested 50/50 in stocks and bonds can sustain 30 years of withdrawals equal to 4% of the initial balance (adjusted annually for inflation) with a 95%+ historical success rate. For a $1 million portfolio, that is $40,000/year or $3,333/month. Some planners now recommend 3-3.5% for longer retirements due to lower expected bond returns.
What return rate should I use for retirement planning?
For the accumulation phase (working years), 6-8% is commonly used for a diversified portfolio of 70-80% equities and 20-30% bonds, reflecting long-term historical averages after fees. For the drawdown phase (retirement), 4-5% is typical for a more conservative 50/60 equity allocation. Do not use nominal returns without adjusting for inflation — a 7% nominal return with 3% inflation is a 4% real return. This calculator uses nominal rates throughout.
How does Social Security affect my retirement number?
Social Security directly reduces how much you need to draw from personal savings. In 2026, the average Social Security benefit is about $1,900/month; the maximum for someone retiring at 70 is around $4,900/month. You can estimate your benefit at ssa.gov using the Social Security Statement. A $1,500/month benefit reduces the amount you need to fund from savings by $18,000/year — meaning your savings need to last longer but be drawn down less aggressively.
What happens if my savings run out before I die?
If savings are depleted before life expectancy, you would rely solely on Social Security and any other income (pension, part-time work, family). To reduce this risk: delay retirement to accumulate more and collect higher Social Security; increase savings rate now; plan for a lower withdrawal rate (3% instead of 4%); consider annuitizing a portion of savings for guaranteed income; or plan to reduce spending in retirement. Sequence-of-returns risk (bad market early in retirement) is the biggest threat to retirement security.
Should I contribute to a 401(k) or Roth IRA first?
Always contribute enough to your 401(k) to get the full employer match — that is an instant 50-100% return on those dollars. Beyond the match: if you expect to be in a higher tax bracket in retirement, prioritize Roth IRA (tax-free growth). If you expect a lower bracket in retirement, traditional 401(k) (pre-tax) may be better. In 2025, 401(k) limit is $23,500 (plus $7,500 catch-up if 50+) and IRA limit is $7,000 ($8,000 if 50+).
Related Calculators
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