About the Retirement Calculator
Two numbers define every retirement plan: the nest egg you need, and the one your savings will produce. The first comes from your desired income (a common rule-of-thumb target is 25× the annual amount you want to withdraw); the second from compounding everything you already have, adding your yearly contributions.
This tool computes both — and the gap, if there is one — so a plan can be adjusted on contributions, retirement age or risk before it becomes a problem discovered at 60.
The formula behind it
Project the savings forward; benchmark against the income rule:
Projected = savings × (1+r)^y + contributions × annuity factor • Target ≈ 25 × desired annual incomey = years between your current age and retirement age; r the expected return. The 25× rule mirrors a 4% safe withdrawal rate (a planning heuristic, not a law — see the withdrawal calculator). Inflation: run with a desired income in today’s money, then verify against the inflation calculator.
Worked example
Defaults — age 35 today, retiring at 65, $60k saved, $12k/yr contributed, 7% expected return:
- 30-year horizon. The $60,000 base grows to about $457,000.
- The $12,000/yr flow compounds to roughly $1.13M.
- Projection lands near $1.59M; needs at 25× a $60k income ≈ $1.5M.
Takeaway: This plan is on track — but by a narrower margin than people intuit (assumptions carry ±20% swag across even a 7% midpoint). Confirm against the withdrawal calculator too.
What moves the result
- Retirement age — each additional year of work is double-duty: one more year of contributions and one less year later to fund.
- Contribution level — the 10% to 15% of pay band generally produces; the match is included in your actual annual contributions.
- Return assumption — a plan that only survives above 8% return is fragile; test 3 bands.
- Inflation — the 25× rule is expressed in today’s dollars because the drawn pension inherently adjusts.
Practical tips
- Under the 25× rule, be generous: a 60× lifetime estimate that can afford to slip underfire at 4–5% draw rates is worth the over-fund.
- Work into the plan the Social Security component — for many households it covers 25–40% of income, reducing the nest-egg need handily.
- Force a rebalanced plan every 5 years: mid-course corrections are 10× cheaper than a caught-late one.
- Model a “what if I retire at 62 vs 67” — it is the biggest single lever most people have available.
- Use the retirement-withdrawal calculator afterward to check that the exit plan actually pays.
Frequently asked questions
What is the 25× rule?
A planning shortcut: your target nest egg is 25 times the annual income you want to draw, which mirrors the classic 4%-rate safe withdrawal logic. It is a starting frame, not a regulation — the withdrawal tool handles the detail.
Should I include Social Security? How do I?
Yes. Enter Social Security as a haircut to your desired income figure — or model the income path over the retirement-withdrawal page. For length-of-life fairness check: look at actual first-benefit estimates at ssa.gov.
How accurate is “7% expected return”?
Long-run US diversified ~10% nominal before fees; net of tax adjustments, a 6–8% planning figure is realistic for most equity-weighted retirements. Project conservatively and let drift work in your favor.