How to Use the Retirement Calculator
- Enter your age, retirement age and the age you want your money to last until.
- Enter current savings and what you contribute each month.
- Set expected returns before and during retirement, plus inflation.
- Enter the yearly income you want in today’s dollars and expected Social Security.
- Press Calculate.
Formula
Projected savings = FV of current savings + monthly contributions Income needed = desired income × (1 + inflation)^years − Social Security (inflated) Nest egg = first-year need × Σ ((1 + inflation) ÷ (1 + return))^k, k = 0 to N−1 Extra saving = shortfall ÷ future-value factor of monthly deposits
Example Calculation
A 35-year-old with $75,000 saved, contributing $1,000 a month, earning 7% until 65, projects about $1.74 million. Needing $70,000 a year in today’s dollars, with $2,000 a month in Social Security, the target is about $1.83 million, a shortfall of about $93,000, or roughly $80 more per month.
What Is a Retirement Calculator?
A retirement calculator connects two numbers: what you are on track to have and what you will need. Showing the gap in dollars, and the extra monthly saving to fix it, turns a vague worry into an action.
How the Nest Egg Is Estimated
The target comes from the present value of a stream of inflation-adjusted withdrawals. A higher assumed return during retirement or a shorter retirement lowers the target. Social Security reduces the amount your portfolio must supply.
Factors That Affect Your Result
- Retirement age: each extra working year adds contributions and shortens the withdrawal period.
- Spending level: the most powerful lever on the target.
- Investment return and inflation.
- Health care costs, which often rise with age.
Ways to Close a Shortfall
- Increase monthly saving, even gradually.
- Work a year or two longer.
- Delay Social Security to increase the benefit; see the Social Security calculator.
- Trim planned spending.
Common Mistakes
- Using today’s dollars for both income need and savings without adjusting for inflation.
- Assuming a high return forever.
- Not planning for a long life.
Read how much should I save for retirement for rules of thumb.