Retirement Calculator — Free Savings Planner

How to Use This Retirement Calculator

Our retirement calculator provides a comprehensive projection of your financial future by modeling both the accumulation phase (saving and investing before retirement) and the distribution phase (withdrawing income during retirement). This dual-phase approach gives you a realistic picture of whether your current savings plan will meet your retirement goals.

1. Enter your current age and target retirement age. The gap between these two numbers determines your accumulation period. A longer accumulation period means more time for compound growth. If you are 30 and plan to retire at 65, you have 35 years of saving ahead of you.
2. Input your current retirement savings. Include all retirement accounts: 401(k), 403(b), IRA, Roth IRA, and any other dedicated retirement investments. This forms the starting balance for your projection.
3. Set your monthly contribution. Enter the total amount you contribute each month to retirement accounts, including any employer match. If your employer matches 50% of your contribution up to 6% of salary, include both your contribution and the match.
4. Adjust return and inflation rates. The expected return rate reflects your investment portfolio performance. A balanced stock and bond portfolio historically returns 6-8% annually. The inflation rate (typically 2-3%) reduces your purchasing power over time. Our calculator uses the real return rate (return minus inflation) for accurate projections.
5. Enter your desired monthly retirement income. Think about how much you need per month to maintain your lifestyle in retirement. A common guideline is 70-80% of your pre-retirement income. The calculator compares your sustainable income against this target.
6. Review the results and adjust. The projection chart shows your savings growing during the accumulation phase (blue) and decreasing during the distribution phase (red). If a shortfall is detected, try increasing contributions, delaying retirement, or reducing desired income to find a plan that works.

Experiment with different scenarios to understand how small changes today can dramatically affect your retirement outcome. Even an extra $100 per month can make a significant difference over decades.

Understanding the Retirement Formula

Retirement planning involves two distinct mathematical phases. The accumulation phase uses compound growth to project how your savings grow, while the distribution phase calculates how long your savings can sustain regular withdrawals.

Where each variable represents:

• FV = Future value (total savings at retirement)
• PV = Present value (current savings)
• r = Real monthly return rate (annual return minus inflation, divided by 12)
• n = Number of months until retirement
• PMT = Monthly contribution

For the distribution phase, we calculate the sustainable monthly withdrawal:

• W = Sustainable monthly withdrawal
• S = Total savings at retirement
• r = Monthly real return rate during retirement
• m = Number of months in retirement (life expectancy minus retirement age, times 12)

Step-by-Step Calculation Example

A 30-year-old with $50,000 saved, contributing $500/month, 7% return, 3% inflation, retiring at 65, needing $4,000/month, planning to age 90:

1. Calculate real return: (1.07 / 1.03) − 1 = 3.88% annually, or 0.324% monthly
2. Accumulation period: 35 years = 420 months
3. Future value of current savings: $50,000 × (1.00324)⁴²⁰ = $194,200
4. Future value of contributions: $500 × [(1.00324)⁴²⁰ − 1] / 0.00324 = $430,100
5. Total at retirement (in today's dollars): $194,200 + $430,100 = $624,300
6. Distribution period: 25 years = 300 months
7. Sustainable monthly income: $624,300 × 0.00324 / [1 − (1.00324)⁻³⁰⁰] = $3,285/month
8. Shortfall: $4,000 − $3,285 = $715/month shortfall

This example shows a modest shortfall, suggesting the individual should increase monthly contributions, delay retirement by a few years, or adjust their income expectations. Increasing contributions from $500 to $650/month would close the gap entirely.

Why the Calculator Defaults to 7% Return

The 7% default annual return reflects the long-term real (inflation-adjusted) return of a diversified U.S. stock portfolio. From 1926 through 2025, the S&P 500 delivered an average annual nominal return of approximately 10%. After adjusting for average historical inflation of roughly 3%, the real return has been approximately 7% per year. This figure is widely used by financial planners, the SEC's investor education materials, and academic research as a reasonable long-term planning assumption for a stock-heavy portfolio. For more conservative portfolios that include bonds, you may want to reduce the expected return to 5-6%. The calculator lets you adjust this rate to match your personal investment strategy and risk tolerance.

Contribution Timing Assumption

This calculator assumes contributions are made at the end of each month. In practice, many people contribute through payroll deductions on a biweekly or semi-monthly schedule, and some contribute a lump sum at the beginning of the year. End-of-month timing is slightly more conservative than beginning-of-month, meaning your actual retirement balance may be marginally higher if you contribute earlier in each period. The difference is typically small (less than 1% of the total balance) but grows with larger contributions and longer time horizons.

Practical Retirement Planning Examples

These real-world scenarios demonstrate how different factors affect retirement outcomes. Each example uses realistic assumptions to help you benchmark your own retirement plan.

Early Career Saver: Starting at 25 with Employer Match

Marcus is 25 years old and just started his career with a $55,000 salary. His company matches 50% of 401(k) contributions up to 6% of salary. He contributes 6% ($275/month) and receives a $137.50 match, for a total of $412.50/month. With $5,000 in current savings and a 7% expected return at 3% inflation, retiring at 65, his projected savings reach approximately $780,000 in today's dollars. This can sustain about $4,100 per month through age 90. By starting early, Marcus benefits enormously from compound growth, with investment returns comprising over 60% of his final balance.

Mid-Career Catch-Up: Starting Seriously at 40

Priya is 40 with $120,000 saved but realizes she needs to get serious about retirement. She increases her 401(k) contribution to $1,000/month and plans to retire at 67. With 7% expected return and 3% inflation, her projected savings reach approximately $620,000 in today's dollars. The sustainable income of roughly $3,600/month would be supplemented by estimated Social Security of $2,100/month, giving her $5,700/month total. After turning 50, she plans to add catch-up contributions of $625/month, potentially boosting her total by another $120,000.

Aggressive Saver: Financial Independence at 50

James and Laura, both 32, have a combined income of $180,000 and save aggressively. With $200,000 already saved and contributing $3,500/month across multiple accounts, they target retirement at 50. At 7% return and 3% inflation, their projected savings reach approximately $1,050,000 in today's dollars by age 50. With 40 years of retirement ahead (to age 90), their sustainable income would be about $3,600/month. To reach their target of $6,000/month, they would need to increase savings or supplement with part-time income in early retirement years before Social Security kicks in.

Late Start: Beginning at 50 with Catch-Up Contributions

Diane is 50 with only $80,000 saved for retirement. She earns $75,000 and maximizes her 401(k) at $2,583/month ($23,500 + $7,500 catch-up = $31,000/year) with an employer match adding $250/month. At 7% return and 3% inflation, retiring at 67, she projects approximately $730,000 in today's dollars. Combined with estimated Social Security of $2,300/month, her total income would be approximately $6,500/month. While starting late means working longer, aggressive saving with catch-up contributions can still build a solid retirement fund.

Retirement Planning Tips and Complete Guide

A successful retirement requires decades of consistent saving and strategic planning. These essential tips help you maximize your retirement savings and avoid the pitfalls that derail even well-intentioned plans.

Maximize Employer Match First

If your employer offers a 401(k) match, always contribute at least enough to get the full match. A typical employer match of 50% up to 6% of your salary is an immediate 50% return on that money, which no investment can reliably beat. If you earn $60,000 and your employer matches 50% of contributions up to 6%, contributing $3,600 per year earns you an additional $1,800 in free money. Not contributing enough to get the full match is literally leaving money on the table.

Take Advantage of Tax-Advantaged Accounts

The order of priority for retirement savings should generally be: first, 401(k) up to employer match; second, Roth IRA to the maximum ($7,000 in 2026); third, back to 401(k) to the maximum ($23,500 in 2026); fourth, a Health Savings Account if eligible ($4,300 individual or $8,550 family in 2026). Each of these accounts provides tax advantages that effectively boost your returns. The HSA is particularly powerful for retirees because it offers triple tax benefits: tax-deductible contributions, tax-free growth, and tax-free withdrawals for medical expenses.

Automate Your Contributions

Set up automatic contributions from your paycheck or bank account so saving happens before you have a chance to spend the money. Most employers allow you to set a percentage of your salary for 401(k) contributions directly from your paycheck. For IRA contributions, set up automatic monthly transfers from your checking account. Many people find it helpful to increase their contribution percentage by 1% each year or whenever they receive a raise, gradually building their savings rate without feeling a sudden lifestyle change.

Plan for Healthcare Costs in Retirement

Healthcare is one of the largest expenses in retirement that many people underestimate. According to Fidelity, an average 65-year-old couple retiring in 2026 will need approximately $325,000 for healthcare expenses throughout retirement, not including long-term care. Medicare does not cover everything, and premiums, deductibles, and out-of-pocket costs add up. Consider purchasing supplemental Medigap insurance, contributing to an HSA while still working, and factoring healthcare inflation (which typically exceeds general inflation) into your retirement budget.

Common Mistakes to Avoid

• Cashing out a 401(k) when changing jobs. Rolling your 401(k) to an IRA or your new employer's plan preserves tax-deferred growth. Cashing out triggers income taxes plus a 10% early withdrawal penalty if you are under 59.5, potentially losing 30-40% of the balance immediately.
• Investing too conservatively at a young age. A 25-year-old with 40 years until retirement can afford to ride out market downturns. Holding mostly bonds or cash in your 20s and 30s means missing out on decades of equity growth. Target-date funds automatically shift to more conservative allocations as you age.
• Ignoring fees in your investments. A 1% annual fee might seem small, but over 30 years it can reduce your portfolio by 25% compared to a 0.1% fee fund. Choose low-cost index funds (typically 0.03-0.10% expense ratios) over actively managed funds (typically 0.5-1.5%).
• Withdrawing from retirement accounts early. Withdrawing from a 401(k) or Traditional IRA before age 59.5 typically incurs a 10% penalty plus income taxes. The long-term cost is even greater because you lose the compound growth that money would have generated. Exhaust all other options before tapping retirement accounts.
• Not adjusting your plan as life changes. Your retirement plan should evolve with major life events like marriage, having children, job changes, salary increases, and health changes. Review your retirement projections at least annually and after any significant financial event.