Retirement Calculator
Find out how much you need saved to retire
This retirement calculator projects your retirement savings based on your current balance, contributions, and expected returns, and estimates whether you're on track to meet your retirement income goal.
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📖 Retirement Planning — How Much Do You Need?
"How much do I need to retire?" is the single most common — and most anxiety-inducing — question in personal finance, largely because the honest answer involves projecting decades into an uncertain future. Fortunately, several well-researched frameworks turn this overwhelming question into a concrete, calculable target.
The 25x Rule: A Simple Starting Target
Required Retirement Savings = Annual Expenses × 25
If you spend $60,000 per year, the 25x rule suggests targeting a retirement portfolio of $1.5 million. This figure isn't arbitrary — it's mathematically derived from the 4% withdrawal rule (see below), since withdrawing 4% annually from a $1.5 million portfolio provides exactly $60,000 in the first year.
The 4% Rule and the Trinity Study
The 4% rule originates from the 1998 "Trinity Study," which analyzed historical US market returns to determine a withdrawal rate that a retirement portfolio (typically modeled as 50-75% stocks, the remainder bonds) could sustain for 30 years without running out of money, across nearly all historical starting periods examined — even including retirements that began right before major market crashes.
| Withdrawal Rate | Historical Success Rate (30-yr horizon) |
|---|---|
| 3% | ~98-100% |
| 4% | ~90-96% |
| 5% | ~70-80% |
| 6% | ~50-60% |
Critically, the 4% rule prescribes withdrawing 4% of your portfolio's value in year one, then adjusting that dollar amount for inflation each subsequent year — not recalculating 4% of the current (fluctuating) balance every year. This distinction matters for actually implementing the strategy correctly in retirement.
Worked Example: Building the Target From Scratch
A 35-year-old wants to retire at 65 with $70,000/year in today's dollars (assuming a paid-off mortgage and modest expenses). Using the 25x rule: $70,000 × 25 = $1,750,000 target portfolio. If they currently have $120,000 saved and can contribute $1,200/month for 30 years, growing at an average 7% annual return:
| Component | Future Value at Age 65 |
|---|---|
| Current $120,000, growing at 7% for 30 years | ~$913,000 |
| $1,200/month contributions for 30 years at 7% | ~$1,469,000 |
| Total Projected Portfolio | ~$2,382,000 |
This projection comfortably exceeds the $1,750,000 target, suggesting this saver is on track — and even has room to potentially retire earlier, spend more in retirement, or increase their margin of safety against poor early-retirement market sequences.
Tax-Advantaged Accounts: 401(k) vs Roth IRA
| Account Type | Contribution Tax Treatment | Withdrawal Tax Treatment | Best When |
|---|---|---|---|
| Traditional 401(k)/IRA | Pre-tax (reduces taxable income now) | Taxed as ordinary income | You expect a lower tax bracket in retirement than now |
| Roth 401(k)/IRA | After-tax (no deduction now) | Completely tax-free, including all growth | You expect a higher tax bracket in retirement, or are early in your career |
Always contribute at least enough to your employer's 401(k) to capture the full employer match before considering other accounts — a typical 50% match on the first 6% of salary is an immediate, guaranteed 50% return that no other investment can reliably replicate.
💡 Sequence-of-returns risk — experiencing a major market downturn in the first few years of retirement — is statistically more damaging than the same downturn occurring later, since you're forced to sell depressed assets to fund living expenses. Many retirees address this by holding 1-3 years of expenses in cash or bonds specifically to avoid selling stocks during a downturn.
📚 Data Sources
- 25x rule / 4% safe withdrawal rate: Wikipedia — Trinity study (Cooley, Hubbard & Walz, 1998)
Based on historical US market returns over rolling 30-year periods. Past performance doesn't guarantee future results — treat this as a planning starting point, not a fixed rule.
❓ Frequently Asked Questions
How much do I need to retire?
The most common rule is the 25x Rule: save 25 times your annual expenses. This supports a 4% annual withdrawal rate indefinitely based on historical market returns. If you spend $50,000/year, you need ~$1.25 million.
What is the 4% withdrawal rule?
The 4% rule says you can withdraw 4% of your portfolio in year one, then adjust for inflation each year, and your portfolio has historically lasted 30+ years. It assumes a balanced portfolio of roughly 60% stocks / 40% bonds.
What is a 401(k)?
A 401(k) is a US employer-sponsored retirement account where contributions are made pre-tax, reducing your taxable income now. Money grows tax-deferred until withdrawal. Many employers match contributions — always contribute at least enough to get the full match.
What is the difference between Traditional IRA and Roth IRA?
Traditional IRA: contribute pre-tax, pay tax on withdrawals in retirement. Roth IRA: contribute after-tax, all growth and withdrawals are tax-free. Roth is generally better if you expect to be in a higher tax bracket in retirement.
When should I start saving for retirement?
As early as possible. A 25-year-old investing $200/month at 8% will have far more at 65 than a 35-year-old investing $400/month — even investing less total money. Time in market is the single biggest factor in retirement wealth.