Retirement Calculator

Plan your retirement savings and estimate your future financial needs

Retirement Planning Calculator

Estimate how much you need to save for retirement and if you're on track to meet your goals.

Current Information

Current Savings

Due to salary increases, etc.

Retirement Needs

What percentage of current income you'll need in retirement
Your estimated monthly Social Security benefit
Pensions, rental income, part-time work, etc.

Economic Assumptions

Generally lower, more conservative rate after retirement

Retirement Calculation Results

Retirement Savings Goal: $0.00
Estimated Monthly Income Needed: $0.00
Expected Monthly Income From Savings: $0.00
Social Security & Other Income: $0.00
Monthly Income Surplus/Deficit: $0.00
Projected Savings at Retirement: $0.00
Savings Difference: $0.00

Understanding Retirement Planning

The Importance of Retirement Planning

Retirement planning is the process of determining retirement income goals, and the actions and decisions necessary to achieve those goals. It includes identifying sources of income, estimating expenses, implementing a savings program, and managing assets and risk.

Planning for retirement shouldn't be a one-time event but rather an ongoing process that evolves as your circumstances change. The earlier you start planning, the more time your money has to grow, and the better prepared you'll be for your retirement years.

Key Components of Retirement Planning

1. Setting Retirement Goals

Your retirement goals should be specific, measurable, achievable, relevant, and time-bound (SMART). Consider factors such as:

  • Desired retirement age
  • Expected lifestyle and related expenses
  • Where you want to live during retirement
  • Activities, travel, and hobbies you plan to pursue
  • Healthcare needs and long-term care preferences
  • Legacy and estate planning goals

2. Estimating Retirement Expenses

Many financial experts suggest that retirees will need 70-80% of their pre-retirement income to maintain their standard of living. However, this is just a rule of thumb. Your actual needs may differ based on:

  • Whether your home will be paid off by retirement
  • Healthcare costs and insurance needs
  • Travel and lifestyle aspirations
  • Whether you plan to work part-time during retirement
  • Potential caregiving responsibilities

3. Identifying Income Sources

Common sources of retirement income include:

  • Social Security: Government benefits based on your work history
  • Employer-sponsored retirement plans: 401(k)s, 403(b)s, pensions
  • Individual retirement accounts (IRAs): Both traditional and Roth
  • Personal savings and investments: Taxable brokerage accounts, CDs, etc.
  • Real estate: Rental income, home equity
  • Part-time work: Gig work, consulting, etc.

4. Building Your Retirement Savings

Strategies to build retirement savings include:

  • Maximizing contributions to tax-advantaged retirement accounts
  • Taking full advantage of employer matches on 401(k) plans
  • Setting up automatic contributions
  • Increasing contributions as your income grows
  • Creating a diversified investment portfolio aligned with your risk tolerance and time horizon

5. Managing Risk

Various risks can impact your retirement security:

  • Longevity risk: The risk of outliving your savings
  • Market risk: The risk of investment losses due to market fluctuations
  • Inflation risk: The risk of purchasing power erosion over time
  • Healthcare risk: The risk of high medical expenses
  • Long-term care risk: The risk of needing expensive assisted living or nursing home care

The Power of Starting Early

Thanks to compound interest, starting your retirement savings early can significantly impact your long-term results. For example, if you start saving $5,000 per year at age 25 with an average annual return of 7%, by age 65 you would have approximately $1,068,000. If you wait until age 35 to start saving the same amount, you would have about $505,000 by age 65—less than half as much.

Adjusting Your Plan Over Time

Your retirement plan should be reviewed and adjusted regularly, especially after major life events such as:

  • Marriage or divorce
  • Birth or adoption of children
  • Career changes or job loss
  • Receiving an inheritance
  • Major health issues
  • Approaching retirement age

Using Our Retirement Calculator

Our retirement calculator helps you estimate how much you need to save for retirement and whether you're on track to meet your goals. By adjusting variables like current age, retirement age, current savings, monthly contributions, and expected rate of return, you can explore different scenarios and make informed decisions about your retirement planning strategy.

Remember that the results provided by this calculator are estimates based on the information you input. Actual results may vary due to factors such as changing investment returns, inflation rates, and life circumstances. It's always a good idea to consult with a financial advisor for personalized retirement planning advice.

Frequently Asked Questions About Retirement Planning

How much money do I need to retire comfortably?

The amount needed for a comfortable retirement varies based on your desired lifestyle, location, health needs, and other factors. A common rule of thumb is that you'll need 70-80% of your pre-retirement income each year. Another approach is the "25x rule," which suggests having 25 times your annual expenses saved by retirement. For example, if you need $60,000 annually, you would aim for $1.5 million in retirement savings. However, these are just guidelines. Your specific needs may be higher or lower depending on factors like whether your mortgage will be paid off, your healthcare needs, whether you plan to travel extensively, and if you'll receive pension or Social Security benefits.

What are the tax implications of different retirement accounts?

Different retirement accounts have different tax treatments:

  • Traditional 401(k)s and IRAs: Contributions are typically tax-deductible, reducing your current taxable income. Growth is tax-deferred, meaning you don't pay taxes on investment gains until withdrawal. Withdrawals in retirement are taxed as ordinary income.
  • Roth 401(k)s and Roth IRAs: Contributions are made with after-tax dollars, so there's no immediate tax benefit. However, qualified withdrawals in retirement, including investment earnings, are completely tax-free.
  • Taxable accounts: You invest with after-tax dollars and pay taxes on dividends, interest, and capital gains as they occur. Long-term capital gains are typically taxed at lower rates than ordinary income.

A diversified approach using different account types can provide tax flexibility in retirement. This allows you to strategically withdraw from different accounts to minimize your overall tax burden.

When should I take Social Security benefits?

You can start taking Social Security benefits as early as age 62, but your benefit amount will be permanently reduced. If you wait until your full retirement age (FRA)—which is between 66 and 67 depending on your birth year—you'll receive your full benefit amount. If you delay taking benefits beyond your FRA, your benefit increases by about 8% per year until age 70.

The decision about when to claim depends on factors such as:

  • Your health and family longevity
  • Whether you plan to continue working
  • Your other sources of retirement income
  • Your marital status (spousal benefits considerations)

If you expect to live well into your 80s or beyond, waiting to claim can result in higher lifetime benefits. However, if you have health concerns or need the income sooner, claiming earlier might make sense.

How should my investment strategy change as I approach retirement?

As you get closer to retirement, it's generally advisable to gradually shift your investment strategy to be more conservative. This doesn't mean eliminating stock investments entirely, but rather reducing your overall risk exposure. A common approach is to increase the percentage of bonds and cash-equivalent investments while decreasing the percentage of stocks.

The traditional rule of thumb was to subtract your age from 100 to determine your stock allocation percentage (e.g., 60% stocks at age 40, 30% stocks at age 70). However, with longer lifespans today, many financial advisors use 110 or even 120 instead of 100.

Beyond simple age-based formulas, consider factors such as:

  • Your risk tolerance
  • Your expected longevity
  • The size of your retirement portfolio relative to your needs
  • Other income sources like pensions or Social Security
  • Whether you plan to leave an inheritance

How does inflation impact retirement planning?

Inflation is a critical factor in retirement planning because it erodes purchasing power over time. Even a modest inflation rate of 3% will cause prices to more than double over a 25-year retirement period. This means that the income you'll need in the later years of retirement will be significantly more than what you need in the early years.

To account for inflation in your retirement planning:

  • Use inflation-adjusted return rates in your calculations
  • Consider investments that have historically outpaced inflation, such as stocks and real estate
  • Look into inflation-protected securities, such as Treasury Inflation-Protected Securities (TIPS)
  • Plan for increasing income needs throughout retirement
  • Consider that some expenses, particularly healthcare, may increase faster than the general inflation rate

Social Security benefits do include cost-of-living adjustments (COLAs), which help maintain purchasing power, but these adjustments may not fully keep pace with your personal inflation experience, especially for healthcare costs.