Retirement Calculator

What this retirement calculator estimates

This tool projects the total size of your retirement nest egg at a target retirement age, given your current savings balance, how much you plan to add each month, and the average annual return you expect to earn on those investments. It also converts that projected balance into an estimated monthly income using a safe withdrawal rate — most commonly the widely cited 4% rule.

The calculation combines two things: the future value of any money you have already saved (which will compound uninterrupted between now and retirement) and the future value of a series of regular contributions (technically an ordinary annuity). Add those two numbers together and you get a single projected nest egg figure. The result is not a guarantee — it is a planning estimate — but it is grounded in the same math that professional financial planners use every day.

How retirement projections work

The engine behind any retirement projection is the future value formula for compounding. When you invest money and it earns a return, the return itself gets reinvested and starts earning its own return the following period. Over decades this feedback loop — often called compound growth — turns modest contributions into surprisingly large balances.

The monthly contribution part of the math works as an annuity: each payment you make today grows at the monthly rate for the number of months remaining until retirement, each payment made next month grows for one fewer month, and so on. The further away a payment is made from retirement, the less time it has to compound. That is why the very first contributions you make — the ones made earliest in your career — punch far above their weight relative to contributions made in the final few years.

The assumed annual return is the single variable that has the biggest impact on your projected balance. The S&P 500 has averaged roughly 10% per year nominally over long historical periods, or about 7% after adjusting for inflation. A diversified portfolio that also holds bonds typically averages somewhat less. Small differences in assumed return compound into large differences in outcome over a 30- or 40-year horizon, which is why it is worth understanding what rate you are plugging in and why.

Worked example: $500/month for 30 years

Consider someone who starts saving $500 per month at age 35 with no prior savings, targets retirement at 65, and earns a 7% average annual return. Entering those numbers into the calculator produces a projected nest egg of roughly $566,000.

The total cash contributed over 30 years is $500 × 360 months = $180,000. That means approximately $386,000 — more than two-thirds of the final balance — came not from contributions but from compound growth on those contributions. The money you actually deposited only accounts for about 32% of the ending balance. This is the core insight of long-term investing: your contributions are the seed, and time plus compounding is the soil.

Now consider what happens if that same person waits just 10 years and starts at 45 instead. With only 20 years to grow, the same $500/month at 7% produces roughly $260,000 — less than half the outcome despite the same monthly savings rate. Those 10 lost years of compounding cost more than $300,000, a far larger sum than the $60,000 in contributions skipped during that decade.

To explore how different contribution amounts or return assumptions change your outcome, try the compound interest calculator alongside this tool.

How much do you need to retire?

The most widely used benchmark for retirement income planning is the 4% rule, developed by financial planner William Bengen in 1994. It states that a retiree can withdraw 4% of their starting portfolio in year one, then increase that dollar amount with inflation each subsequent year, and have a historically high probability — roughly 95% over the periods Bengen studied — of the portfolio lasting at least 30 years.

Applied as a target: if you want $4,000 per month in retirement income ($48,000 per year), you divide that annual figure by 4% and arrive at a target portfolio of $1,200,000. Expressed as a simple multiplier, you need roughly 25 times your desired annual spending. That is the ballpark number most financial planners start with when clients ask how big a nest egg they need.

It is important to understand the rule's limitations. The 4% figure was calibrated on a specific historical period and a specific 60/40 stock-bond portfolio mix. Some researchers argue that lower future expected returns — given where valuations and bond yields have been — make 3% to 3.5% a more conservative starting rate for people retiring today, especially if they expect a retirement lasting 35 or 40 years rather than 30. Others note that flexible spending (reducing withdrawals in bad market years) can make 4% sustainable even in difficult markets.

Inflation adds another layer of complexity. A monthly income that feels comfortable at retirement will have less real purchasing power 20 years later if prices rise at even a modest 2–3% per year. That is a strong argument for keeping at least a portion of your portfolio in growth assets (equities) well into retirement rather than shifting entirely to cash or bonds at age 65. For a broader look at how inflation erodes purchasing power over time, see our ROI calculator.

Common retirement planning mistakes to avoid

• •Starting too late. As the worked example above shows, a decade of delay can cost far more in lost compound growth than the contributions you would have made during those years. Starting with even a small amount early is almost always better than waiting until you can save a larger amount later.
• •Being too conservative with asset allocation early on. Holding mostly cash or bonds in your 30s and 40s to avoid short-term volatility means accepting lower long-term returns during the exact decades when compound growth matters most. Young savers have decades to recover from market downturns; the real risk at that stage is not reaching the target, not temporary paper losses.
• •Leaving employer match money on the table. If your employer matches 401(k) contributions up to a certain percentage of your salary, not contributing at least enough to capture the full match is effectively turning down part of your compensation. The match provides an immediate 50–100% return on the matched portion before any investment growth occurs.
• •Forgetting to account for inflation. Projections using a nominal 7% return look more impressive than projections using a real 4–5% return, but the latter more accurately reflects what your future dollars will actually buy. Consider running the calculator twice — once with your nominal expected return and once with the inflation-adjusted figure — to see the real-terms range.
• •Raiding retirement savings early. Withdrawing from a 401(k) or IRA before age 59½ typically triggers a 10% early withdrawal penalty on top of ordinary income tax. Beyond the immediate cost, you permanently lose the compounding those withdrawn funds would have done for the remaining years until retirement. Even small early withdrawals can meaningfully reduce a final nest egg.
• •Underestimating healthcare costs. Healthcare is one of the largest and least predictable expenses in retirement. Fidelity estimates that the average couple retiring at 65 in the US needs roughly $300,000 in today's dollars specifically for healthcare expenses over retirement, separate from all other living costs. Factor this into how large a nest egg you actually need.

Want to understand how changes to your income affect how much you can afford to save? Check out the salary calculator for a breakdown of take-home pay at different income levels.