How much should I save for retirement?

A common rule of thumb is to save 15% of your gross income for retirement (including any employer match). The exact amount depends on your retirement age, desired lifestyle, Social Security income, and how long you expect to live. Use the calculator to find the specific number for your situation.

What return rate should I assume for my retirement portfolio?

Historical US stock market returns have averaged around 7–10% per year before inflation (roughly 5–7% after inflation). For a balanced portfolio (60% stocks, 40% bonds), 5–7% is a reasonable pre-retirement assumption. Post-retirement, a more conservative 4–5% is often used as portfolios shift to bonds and stable assets.

The 4% rule is a retirement withdrawal guideline suggesting you can safely withdraw 4% of your nest egg per year (adjusted for inflation each year) with a high probability the money lasts 30 years. It originated from the "Trinity Study" (1998). To find how much you need saved: multiply your desired annual income by 25 (the inverse of 4%). For example, $60,000/year requires $1,500,000 saved.

Will Social Security cover my retirement expenses?

Social Security replaces roughly 40% of pre-retirement income for average earners, but this varies significantly by lifetime earnings and claiming age. Full retirement age is 67 for those born after 1960. Claiming at 62 reduces benefits by up to 30%; waiting until 70 increases them by 24%. Check ssa.gov for your personalized estimate.

How does compound interest help retirement savings?

Compound interest means your investment returns themselves earn returns. Over 35 years at 7% per year, $50,000 grows to over $530,000 without any additional contributions - more than 10× the original amount. Starting early is the single most powerful factor in retirement readiness.

Retirement Calculator

How retirement projections work

The calculator models two phases: accumulation (from your current age until retirement) and withdrawal (from retirement through life expectancy).

During accumulation, each year your balance grows by your contributions, employer match, and investment returns:

Balance = (Balance + Contribution + Match) × (1 + Return)

Contributions increase by your stated annual raise percentage each year, reflecting typical salary growth and contribution increases over a career.

During withdrawal, your desired income is adjusted for inflation each year. Your portfolio withdraws the gap between desired income and other sources (Social Security, pension), and the remaining balance continues to earn returns:

Balance = (Balance − Withdrawal) × (1 + Post-Retirement Return)

What return rate should I assume?

The US stock market (S&P 500) has returned approximately 10% nominal / 7% real per year on average over the past century. A diversified retirement portfolio (stocks + bonds) typically assumes 6–8% pre-retirement and 4–6% post-retirement as the allocation shifts to more conservative assets. The calculator defaults to 7% pre-retirement and 5% post-retirement - adjust these to match your actual portfolio and risk tolerance.

Inflation and your retirement

Inflation erodes purchasing power over time. At 2.5% annual inflation, $60,000 today buys the same as $120,000 in 29 years. The calculator shows both nominal (future dollars) and real (today's dollars) balance figures so you can see what your nest egg is truly worth.

The 4% rule explained

The "4% rule" originated from a 1998 study showing that a retiree who withdraws 4% of their portfolio in year one, then adjusts for inflation annually, has a very high probability of not running out of money over a 30-year retirement. To find your target:

Target Nest Egg = Desired Annual Income × 25

For example, $50,000/year in retirement requires $1,250,000 saved. Subtract other income sources (Social Security, pension) before applying this rule, since only the gap needs to come from savings.

Social Security integration

Social Security benefits significantly affect how much you need to save. You can estimate your benefit at ssa.gov/estimator. The three key claiming ages:

Age 62: earliest eligibility; benefit is permanently reduced by 25–30% (for those with full retirement age of 67).
Full retirement age (67 for those born 1960+): 100% of earned benefit.
Age 70: benefit grows by 8% per year past full retirement age (delayed credits). Claiming at 70 maximizes lifetime benefit for those with long life expectancy.

Monte Carlo vs. deterministic projections

This tool uses deterministic projections: it applies a single assumed average return rate each year, ignoring year-to-year market volatility. Real portfolios experience return variability that can dramatically change outcomes. Monte Carlo simulation runs thousands of randomized scenarios using historical return distributions to calculate the probability of your portfolio lasting through retirement. For a rigorous analysis, consider using a Monte Carlo retirement planning tool alongside this calculator.

Healthcare costs in retirement

Healthcare is often the largest unplanned expense in retirement. Fidelity Investments (2023) estimates that an average 65-year-old couple will need approximately $315,000 in after-tax savings to cover healthcare costs not covered by Medicare. Key factors: Medicare premiums (Part B + D + supplement), dental and vision (not covered by basic Medicare), and potential long-term care costs ($50,000–$100,000/year for assisted living).