Retirement Calculator

How to Plan for Retirement

Retirement planning is one of the most important financial decisions you'll make. Our retirement calculator helps you understand how much you need to save and whether your current savings plan will meet your retirement goals.

Understanding the Results

The calculator provides several key metrics:

• Total at Retirement: The projected value of your savings when you retire, based on your current savings, monthly contributions, and expected return rate.
• Monthly Income: How much you can safely withdraw each month in retirement using the 4% rule (a widely accepted guideline for sustainable withdrawals).
• Years Money Lasts: How long your retirement savings will last based on your expected annual expenses and withdrawal rate.
• Recommended Contribution: The monthly amount you should save to comfortably cover your retirement expenses.

The 4% Rule Explained

The 4% rule suggests you can safely withdraw 4% of your retirement savings annually without running out of money for at least 30 years. This rule assumes a balanced portfolio and accounts for inflation. While not perfect, it's a helpful starting point for retirement planning.

How Much Do I Need to Retire?

A common rule of thumb is to save 25 times your annual expenses (which equals the 4% rule). For example:

• Annual expenses of $40,000 → Need $1,000,000 saved
• Annual expenses of $60,000 → Need $1,500,000 saved
• Annual expenses of $80,000 → Need $2,000,000 saved

Maximizing Your Retirement Savings

1. Start Early: Time is your greatest asset. Even small contributions early in your career can grow substantially through compound interest.
2. Employer Match: Always contribute enough to your 401(k) to get the full employer match—it's free money.
3. Increase Contributions: Try to increase your savings rate by 1% each year or whenever you get a raise.
4. Minimize Fees: Investment fees can significantly reduce your retirement savings. Use our Investment Fee Analyzer to see the impact.
5. Diversify: Spread your investments across different asset classes to manage risk while pursuing growth.

What's a Realistic Return Rate?

Historical stock market returns average around 10% annually, but after accounting for inflation (typically 2-3%), a real return of 7% is commonly used for retirement planning. Conservative investors might use 5-6%, while aggressive investors might use 8-9%.

Common Retirement Planning Mistakes

• Underestimating retirement expenses (healthcare costs often increase)
• Assuming Social Security will cover all needs
• Not accounting for inflation
• Retiring with debt
• Not having a withdrawal strategy