How This Calculator Works
This calculator uses month-by-month compounding to project your savings balance at retirement. It then compares that projection to your target nest egg — calculated using the 4% rule — adjusted for inflation and Social Security income.
The income you enter is in today's dollars. The calculator adjusts it for inflation so your purchasing power is preserved at retirement. Social Security benefit estimates should also be in today's dollars — the Social Security Administration indexes benefits for inflation automatically.
The 4% Rule Explained
The 4% rule comes from the "Trinity Study" — a landmark analysis of historical market returns that found a 4% annual withdrawal rate had a very high probability of lasting 30 years across various market conditions. It's a useful planning benchmark, though not a guarantee.
In practical terms: multiply your annual retirement spending (after Social Security) by 25 to get your target nest egg. If you need $40,000/year from your portfolio, you need $1,000,000 saved.
Retirement Savings Benchmarks by Age
Fidelity's widely cited benchmarks suggest the following savings targets (as a multiple of annual salary) to stay on track for retirement at 67:
| Age | Savings Target |
|---|---|
| 30 | 1× annual salary |
| 40 | 3× annual salary |
| 50 | 6× annual salary |
| 60 | 8× annual salary |
| 67 | 10× annual salary |
These benchmarks assume a 15% savings rate (including employer match), a 50/50 stock/bond portfolio, and retirement at 67. Retiring earlier or spending more requires a larger multiple.
How to Close a Retirement Gap
If this calculator shows a gap, you have several levers:
- Increase contributions: The calculator shows exactly how much more per month you'd need. Even small increases add up significantly over 20–30 years.
- Work longer: Each additional year gives your savings more time to grow and reduces the number of years you need to fund.
- Spend less in retirement: Reducing your target income by even $5,000/year cuts the required nest egg by $125,000 (at the 4% rule).
- Delay Social Security: Waiting until 70 to claim can increase your benefit by up to 32% vs. claiming at 67.
- Improve returns: A higher allocation to equities historically increases returns, but also increases volatility.
Frequently Asked Questions
Should I use pre-tax or after-tax savings?
This calculator uses pre-tax savings (like a traditional 401(k) or IRA). In retirement, withdrawals from these accounts will be taxed as ordinary income. If most of your savings are in a Roth account (after-tax), your projected balance represents spendable dollars directly. Adjust your income target accordingly.
What about required minimum distributions (RMDs)?
The IRS requires minimum withdrawals from traditional retirement accounts starting at age 73. This calculator doesn't model RMDs, but they don't change your total wealth — they just dictate the minimum amount you must withdraw and pay taxes on each year.
Is 7% a realistic return assumption?
The U.S. stock market (S&P 500) has historically returned about 10% annually before inflation and roughly 7% after inflation. Whether the next 30 years will match history is unknown. Many financial planners use 5–7% for conservative projections. The more conservative your assumption, the safer your plan.