Retirement Savings Calculator

How to use this calculator

Enter where you are now, what you expect to add each month, and the return you expect while saving. Then describe the retirement you are planning for: the income you want in today’s money, the return you expect once retired, how long retirement should last, and the inflation rate to assume.

The projection reports a balance at retirement in both future dollars and today’s money, and compares a modeled level monthly withdrawal against the income you said you wanted.

Methodology

Accumulation. The model compounds monthly at one-twelfth of the annual return. Each month the existing balance grows first, then the contribution is deposited at the end of the month. End-of-month timing means the last contribution earns no growth; this is the more conservative of the two common conventions, and using beginning-of-month timing would produce a slightly larger balance.

Contribution increases. The monthly contribution is multiplied by the annual increase once at each completed twelve months — at months 12, 24, 36, and so on. The first twelve months always use the figure you entered.

Inflation. Nominal results are divided by inflation compounded over the years until retirement. Because a single deflator is applied at the retirement date, the nominal and today’s-money figures describe the same instant, and the comparison against your desired income is made entirely in today’s money.

Drawdown. The modeled drawdown is the level monthly withdrawal that exactly exhausts the projected balance over the retirement duration. At a zero expected return it is the balance divided by the number of months; otherwise it is the standard annuity payment, computed in a numerically stable form so that very small returns and very long retirements stay accurate.

“Level” here means level in nominal dollars: the same figure is withdrawn every month from the first year of retirement to the last, and it does not increase with inflation once retirement begins. The today’s-money version of that withdrawal is produced by the single deflator described above, which is anchored to the retirement date. It therefore states the purchasing power of the withdrawal at the moment you retire, and not at any later point in retirement. Because prices keep rising while the withdrawal does not, the same amount buys progressively less as retirement goes on — at 2.5% inflation over a 25-year retirement, the final withdrawal has roughly half the purchasing power of the first.

This model does not offer inflation-adjusted withdrawals. Comparing one against the level figure shown depends on which quantity you hold fixed, and the two comparisons move in opposite directions:

• Same starting balance. From the balance projected here, a plan that raises withdrawals with inflation each year has to begin below the level figure shown. The smaller early withdrawals are precisely what fund the larger later ones.
• Same first-year withdrawal. To begin at the level figure shown and raise it with inflation every year afterwards, the balance at retirement would have to be larger than the one projected here.

These are not in tension: the first holds the balance constant and asks what the withdrawal becomes, the second holds the withdrawal constant and asks what the balance must be. Either way, if you intend to index withdrawals to inflation, this calculator overstates what the balance supports.

Assumptions and limitations

The model assumes a constant return, a constant inflation rate, contributions made exactly as entered, and withdrawals taken evenly. Real markets do none of these things. Returns vary year to year, and the order in which good and bad years arrive materially changes outcomes — a risk this projection cannot show.

Withdrawals are level in nominal dollars and are never indexed to inflation. The today’s-money figures describe purchasing power at the retirement date only. Spending power during retirement is therefore not held constant, and the modeled withdrawal shown will feel smaller each year in practice.

Not included: taxes on contributions, growth, or withdrawals; account and fund fees; employer matching; pensions; Social Security or other government benefits; healthcare costs; changes in your contribution rate; and any change in your circumstances.

Nothing here is a guarantee or a prediction, and it is not personalized financial advice. Treat the output as one scenario among many. A qualified financial professional can account for your tax situation, benefits, risk tolerance, and goals in a way that a general calculator cannot.

Reading the comparison

The surplus or shortfall is stated in today’s money so it is directly comparable to what you entered. A shortfall is a prompt to explore adjustments — saving more, retiring later, spending less in retirement, or revisiting the return assumption — rather than a verdict.

Small changes to the assumed return or inflation rate compound into large differences over decades. Running the calculation more than once with deliberately pessimistic and optimistic inputs is usually more informative than any single result.