Retirement Calculator

Our Retirement Calculator can help plan for retirement financially. Each calculation can be used either separately for quick and simple calculations or in chronological order as a more comprehensive walkthrough of retirement planning.

How Much Do You Need to Retire?

Different people envision different retirements, shift the "Income Needed After Retirement" percentage up or down to reflect these differences.

Your Age Now 
Your Planned Retirement Age 
Your Life Expectancy   estimate yours, 79 in U.S. on average
Expected Social Security Income/Month   estimate your number at SSA.gov
Other Income after Retirement/Month   pension, rental property income...
Average Investment Return%
Inflation Rate (Annual)%
Your Current Income/Year
Income Needed after Retirement%   70-80% to maintain life style
 

How to Save for Your Retirement?

This calculation compares different saving plans in order to reach desired targets.

Your Age Now 
Your Planned Retirement Age 
Amount Needed at the Retirement Age 
Your Retirement Savings Now 
Average Investment Return%
 

How Much can You Withdraw After Retirement?

This calculation estimates the amount withdrawable every month in retirement.

Your Age Now 
Your Planned Retirement Age 
Your Life Expectancy 
Your Retirement Savings Today 
Annual Contribution 
Monthly Contribution 
Average Investment Return%
Inflation Rate (Annual)%
 

How Long Your Money Can Last?

This calculation allows for comparison of the correlation between the lifespan of funds and their monthly withdrawable amounts.

The Amount You Have 
You Plan to Withdraw/Month
Average Investment Return%
 


Related401K Calculator | Roth IRA Calculator | Investment Calculator

This calculation allows for comparison of the correlation between the lifespan of funds and their monthly withdrawable amounts.

What is Retirement?

To retire is to withdraw from an active working life, and for most retirees, for the rest of their lives. Retirement is different for everyone. Age wise, it can be during any normal working year in adulthood. Some may choose to "semi-retire" by gradually decreasing their work hours as they approach retirement. Some announce retirement and enter it short-term, just to rejoin the workforce again because they despised it so much. Whatever the case, retirement is an important consideration for everyone, and generally occurs between the ages of 55 and 70. However, when not forced to retire due to various reasons such as illness or disability, most people choose to retire when they are ready and comfortable with the big decision.

One of the most important factors that affect the decision to retire is whether a person is financially able to do so. While it is possible to retire with nothing in savings and rely on side incomes and Social Security instead, it is generally a bad idea for most due to the sheer difference between a working income and little or no income. Planning for retirement means having saved enough money (usually over a span of decades) to live on comfortably for the rest of a person's life. So of course, the oft-asked question becomes: How much should be saved for retirement? While many different experts and advisors have tried to address the question, there is one general rule of thumb that seems to work for most people: the rule says to save 10% to 15% of pretax income.

Retirement is only one part of the complexity known as personal finance. While it is important, remember that mortgages, investments, car loans, student debts, credit cards, and many other financial responsibilities require just as much meticulous care.

Common Sources of Retirement Funds

People generally rely on the following for financial support after retirement:

Social Security—a social insurance program run by the government to provide protection against poverty, old age, and disability. In the United States, approximately one-third of the working population expect Social Security to be their major source of income after retirement. Conversely, more than 50% of retirees expect Social Security to be their major source of income.

Pensions—most public servants in the United States are not covered by Social Security, but by pension programs. Some private employers also provide pension benefits.

Retirement Savings Plans—these normally refer to 401(k)s and IRAs (Individual Retirement Accounts) in the U.S., and are the savings from personal income. Tax benefits are implemented to encourage saving in these accounts.

Personal Savings—savings in a bank or financial institution, such as savings accounts, CDs (Certificates of Deposit), and checking accounts.

Social Security

According to a 2016 study conducted by GOBankingRates, 35% of all adults in the U.S. have less than $1,000 in savings, and 34% have zero savings1. At these savings rates, these American adults will not have enough saved for a conventional retirement and will most likely rely on SS for help.

Future proceeds from SS only loosely correlate with past income levels. For example, $700 of monthly earnings only results in a monthly benefit in retirement of $630. Increase the monthly earnings by 400% and the benefit increases only by 156% to $1,616. Double the earnings once more, and the benefit increase is just 50%. What this translates to is that low income-earners have more to gain from their initial investments into SS relative to higher-income earners. High-earners who eventually retire with very little savings and heavy reliance on SS in retirement will have dramatic changes of financial scenery at that stage, and must coordinate their lifestyle and spending habits accordingly.

For more information about SS or to do calculations involving SS, please visit our Social Security Calculator.

Pensions, 401(k)s, Individual Retirement Accounts, and Other Savings Plans

401(k), 403(b), 457 Plan

In the U.S., one of the most popular ways to save for retirement include Employer Matching Programs such as the 401(k) and their offshoot, the 403(b) (nonprofit, religious organizations, school districts, governmental organizations). Employers may "match" dollar for dollar their employees' contributions into their plans, up to certain percentages that are different for each 401(k) offered through different organizations. Only 6% of companies that offer 401(k)s don't make some sort of employer contribution. It can fluctuate wildly from company to company, but percentage matches can be anywhere from 1% to 6% of salary; some do a dollar-to-dollar match up to a certain percentage, then match a lower amount up to another certain percentage. For instance, a 1:1 match up to 3%, then a 1:2 match up to 8%. Due to these employer contributions, Employer Matching Programs generally offer more bang for each retirement buck invested compared to other forms of saving for retirement.

In addition to this benefit, Employer Matching Program contributions are made using pre-tax dollars. Funds are essentially allowed to grow tax-free until distributed. Only distributions are taxed as ordinary income in retirement, most likely when the retiree has fallen to lower tax brackets. For tax year 2017, the 401(k) contribution limit is $18,000.

Please visit our 401K Calculator for more information about 401(k)s.

IRA and Roth IRA

The traditional IRA (Individual Retirement Account) and Roth IRA are also popular forms of retirement savings. Just like 401(k)s and other Employer Matching Programs, there are specific tax shields in place that make them both appealing. However, there are smaller annual limits each year for how much can be contributed towards the total of both. In 2017, that number is $5,500 a year, or $6,500 for anyone aged 50 or older. The big difference between traditional IRAs and Roth IRAs is when tax is applied. The former's contributions go in pre-tax (usually taken from gross pay, very similar to 401(k)s) but is taxed upon withdrawal. In contrast, Roth IRA contributions utilize after-tax dollars when deposited, but are not taxed when withdrawn in retirement.

For more information about traditional IRAs or Roth IRAs, please visit our IRA Calculator or Roth IRA Calculator.

Pension Plans

Pension plans are retirement funds that employers pool together and manage for their employees until they retire. Upon retirement, each employee can then choose to have fixed payouts from their share of the pension pot or sell them as a lump sum to an insurance company. They can then have those incomes distributed as cash flows until death as an annuity. There are two types of pension plans: defined contribution plans and defined benefit plans. 401(k)s are examples of defined contribution plans. However, when people refer to pension plans, they are generally talking about defined benefit plans.

Defined benefit pension plans were a popular form of savings for retirement in the past, but they have since fallen out of favor, most notably because they allow a person to transition from company to company without forfeiting much of the benefits they worked hard to accumulate over decades. From 1980 through 2008, the participation of private wage and salary workers in defined benefit plans fell from 38% to 20%. However, they can still be found in the public sector or traditional corporations that experience very low turnover and high employee loyalty.

We have a Pension Calculator for calculations involving pensions and more information regarding them.

Personal Savings

One of the reasons people tend to underestimate how much they need to save for retirement is because they forget to account for the impact of inflation. In the modern day, inflation is relatively low in developed countries, but over the long haul, its effects can be seen and felt. Ask any senior citizen what they think about the cost of a cheeseburger from McDonald's when they were young as compared to now - this is the result of inflation. The average inflation rate in the United States for the past 30 years has been around 4.3%, and over decades, this can snowball. Due to this effect, saving for retirement using personal savings such as cash, checking accounts, savings accounts, or other forms of intentionally liquid assets will offer little or no earnings on interest, or growth of funds, relative to investments into retirement savings plans that are intentionally created to grow over several decades.

That's not to say that there aren't certain benefits to keeping retirement savings in readily-available form. Emergency funds are an important part of healthy savings plans. Not only can emergency funds be used for eventual retirement purposes, but they can also be used for just that, emergencies. Medical issues, job losses, or any financial surprises that arise can be alleviated with emergency funds. Nevertheless, retirees need to be cognizant of the continuous erosion of spending power that will take place over their retirement years, and the Retirement Calculator considers inflation in several calculations.

Please visit our Inflation Calculator for more information about inflation or to do calculations involving inflation.

Other Sources of Retirement Income

Home equity and real estate—For some people in certain scenarios, preexisting mortgages, and ownership of real estate can be liquidated for disposable income during retirement. Many people own at least one house - retirees are no different; they worked hard for decades in order to build equity in their homes, which can in turn be "reverse-mortgaged' to turn them into steady flows of income. A reverse mortgage is just as it is aptly named – a reversing of a mortgage where at the end (the last amortized payment has been released), ownership of the house is transferred to whoever bought the reverse mortgage. In other words, retirees are paid to live in their homes until a fixed point in the future, where ownership of the home is finally transferred.

Annuities—Some people like to receive income in retirement through annuities, which are fixed sums of cash flow distributed, typically for the rest of their life. There are two types of annuities, immediate and deferred. Immediate annuities are upfront premiums paid that release payments from principal starting as early as the next month, while deferred annuities are built over time until the sum is released over time as an income stream. Regarding retirement, both have their uses. For more information, it may be worth checking out our Annuity Calculator or Annuity Payout Calculator to determine whether annuities are viable options for retirement.

Passive Income—Passive income during retirement can come in forms such as rental properties, as business owners, stock dividends, or royalties. Also, just because other investments don't have tax benefits doesn't mean they should be ruled out. When 401(k) and IRA contributions have reached their contribution limits, passively-held investments offer another avenue where any remaining money can be placed.

Inheritance—It is possible to receive large inheritances from family members to be used as income for retirement. Because funds have not actually changed ownership, they are still subject to many changes, such as taxation, legal rights, and financial volatility. For more information about inheritance, please visit our Estate Tax Calculator.


1. Kirkham, Elyssa. "1 in 3 Americans Have $0 Saved for Retirement." GOBankingRates. December 30, 2016. Accessed September 28, 2017. https://www.gobankingrates.com/investing/1-3-americans-0-saved-retirement/.