Retirement Calculator

real return = (1 + annual return) ÷ (1 + inflation) − 1 | projected balance = initial balance × (1 + i)^n + (contribution ÷ 12) × ((1 + i)^n − 1) ÷ i, at the real return | target nest egg = annual spending ÷ withdrawal rate | gap = projected balance − target nest egg

Annual spending in retirement

What a year of retirement costs, stated in today's money — the same way you would describe your spending now. It is divided by the withdrawal rate to produce the target, so it is the only input on this page that changes the target: everything else changes the projection. It is also the figure people most consistently underestimate, because it is usually entered without health costs, one-off replacements, or the fact that some spending falls and some rises.

Withdrawal rate

The share of the nest egg you plan to take each year, as a decimal. This page endorses no value for it, and the default is a starting point rather than a finding. A rate is a statement about how long the money has to last and what it is invested in, and no authority publishes a figure that is safe for every case; the closest thing to a sourced number is the required-minimum-distribution floor, which is a minimum rather than a ceiling and is discussed in the FAQ. Lowering it raises the target, and the target is a stock, not a promise.

Inflation rate

The rate at which you expect prices to rise, used only to convert the projection into today's money. Its lower bound is zero: a negative rate would drive the real return toward infinity, and deflation planning is not a question this page is built to answer. Note what the conversion assumes — that your contributions rise with inflation too, so that a fixed real amount is being saved every month.

Real return

The annual return with inflation divided out: (1 + return) ÷ (1 + inflation) − 1, not the return minus the inflation rate. The two differ by a small amount that grows with the rates, and the division is the correct one because returns compound multiplicatively. When the two rates are equal this is exactly zero, and the projection becomes the sum of the deposits — the one case where the answer is arithmetic rather than a forecast.

i and n

The real return per period and the number of periods, formed the same way as on the other pages in this batch. Both sides of the comparison run on them, and because the real return is what enters here, every year the projection covers is a year of purchasing power rather than a year of nominal growth.

Gap

Projected balance minus target, and its sign is the direction of the answer. Unlike the deposit figure on the savings goal page, this one is NOT floored at zero: a negative number is the most useful sentence this page produces, so the field label avoids one-directional words and the FAQ says how to read both directions.

Use it when you already have a saving habit and want to know whether it lands, rather than when you are still deciding what to save. It is a one-year-at-a-time check to repeat as the inputs drift, not a plan: the projection assumes a constant real return and constant real contributions, so its value is in the size of the gap and the direction it is moving, not in the second decimal. It does not count any income you have not entered, and the largest of those — a state pension or an annuity — is usually the one that changes the answer most.

1. The default case

   1. Real return: 1.07 ÷ 1.03 − 1 = 3.8835%. Per period: 3.8835% ÷ 12 = 0.3236%.
   2. Periods: 25 × 12 = 300. Growth factor: 1.003236^300 = 2.63591.
   3. The 100,000 already saved becomes 100,000 × 2.63591 = 263,591 in today's money.
   4. The contributions are 1,000 a month; annuity factor (2.63591 − 1) ÷ 0.003236 = 505.53, worth 505,530.
   5. Projected balance: 263,591 + 505,530 = 769,171 (769,170.96 before rounding within the steps).
   6. Target nest egg: 60,000 ÷ 0.04 = 1,500,000.
   7. Gap: 769,170.96 − 1,500,000 = −730,829.04.

   The shortfall is nearly half the target, and the projection is not the reason — the spending figure is. A 4% withdrawal rate means a 25-fold multiple of annual spending, so 60,000 a year implies 1.5 million, which is a much larger number than most people carry around in their heads as a target.

2. Forty years instead of twenty-five

   1. Same real return, 3.8835%, but 480 periods: growth factor 1.003236^480 = 4.71573.
   2. The initial 100,000 becomes 471,573 in today's money.
   3. Contributions are 1,666.67 a month; annuity factor (4.71573 − 1) ÷ 0.003236 = 1,148.16, worth 1,913,561.
   4. Projected balance: 471,573 + 1,913,561 = 2,385,134 (2,385,133.78 before rounding within the steps).
   5. Target is unchanged at 1,500,000, because the target depends on spending and the withdrawal rate only.
   6. Gap: 2,385,133.78 − 1,500,000 = +885,133.78.

   The gap does not just shrink, it changes sign — and note that the target was identical in both cases. Fifteen more years and a larger contribution moved a 730,829 shortfall into an 885,134 surplus, while the thing being aimed at never moved at all.

3. A zero real return

   1. Real return: 1.03 ÷ 1.03 − 1 = 0.
   2. With no real growth the projection is what was paid in: 100,000 + 1,000 × 300 = 400,000.
   3. Target nest egg: 60,000 ÷ 0.04 = 1,500,000.
   4. Gap: 400,000 − 1,500,000 = −1,100,000.

   A return that only keeps pace with inflation leaves the projection equal to the deposits, and in today's money that is exactly right — the money grew nominally and bought nothing more. This is the row that shows why the conversion matters: done in nominal terms, the same case would show a balance of 837,000-odd and understate the shortfall by a third.

4. An 8% withdrawal rate

   1. Nothing on the projection side changes: 769,170.96 either way.
   2. Target nest egg: 60,000 ÷ 0.08 = 750,000.
   3. Gap: 769,170.96 − 750,000 = +19,170.96.

   Doubling the withdrawal rate halves the target and turns the same shortfall into a surplus, without a single input on the saving side being touched. This is the page's most important warning as well as its most convenient result: the rate is doing more work here than the twenty-five years are, and nothing in the arithmetic checks whether 8% is sustainable.

5. No spending to fund

   1. Target: 0 ÷ 0.04 = 0.
   2. Gap: 769,170.96 − 0 = 769,170.96, which is just the projection.

   A degenerate case that is worth running once because it isolates the two halves: with no spending the page becomes an ordinary compounding calculator, and with no saving it would become a pure target. The value of the page is in the subtraction between them, and the subtraction is only as good as the spending figure.

No withdrawal rate is endorsed, and the default is a starting point rather than a finding. Whether a given rate survives depends on the sequence of returns, the length of retirement, and what the money is invested in — none of which this page takes as input, and none of which any authority the page can cite has settled. The single rate with a legal basis anywhere in this comparison is the required-minimum-distribution divisor, which is a floor rather than a safe ceiling, and it is in the FAQ as a reference point rather than as a default. These are not the only two ways of asking the question. A different approach projects the withdrawals forward and asks how long the money lasts; this page inverts that into a target, which is easier to compare against a balance but cannot show a plan that runs out in year nineteen. The projection is in today's purchasing power, which assumes contributions rise with inflation. If your contributions stay flat in nominal terms, they buy less every year and this page is optimistic by the difference. Income that is not entered is not counted. For most households the largest omission is a state pension or an annuity, which is a stream of income that reduces the target rather than a balance that increases the projection — leaving it out makes the gap look worse than it is. Taxes are not modelled on either side. Contributions in a taxable account are made out of taxed income, withdrawals from a traditional retirement account are taxed as ordinary income, and the spending figure should be what you need after tax rather than before — a distinction that can move the target by a quarter. Nothing about the return is modelled as a sequence. A constant real return is an average with the volatility removed, and the years before and after retirement are exactly where the order of returns matters most. Required minimum distributions are not modelled, so a projection that grows past the point where the law starts forcing withdrawals still shows them compounding untouched.

What withdrawal rate should I use?

This page will not tell you, and it is worth being suspicious of anything that will. A rate is a claim about how long the money has to last, what it is invested in, and what the market does in the first decade — and no authority publishes a figure that holds for every case, which is why the default here is a starting point rather than a finding. The one rate in this comparison with a published basis is the required-minimum-distribution divisor from the retirement rules: at 73 the factor is 26.5, so the legally required withdrawal is about 3.77%. That is a floor on what must come out, not a ceiling on what is safe, so it is a reference point and not a recommendation either.

Why divide spending by a rate instead of projecting withdrawals forward?

Because the two are inverses of the same question and this direction is the one that compares against a balance. Projecting withdrawals forward answers how long the money lasts; dividing spending by a rate answers how much has to exist for a given income to be drawn from it. The second is a stock, the first is a duration, and only the stock can be subtracted from a projected balance. The cost of choosing this direction is that the page cannot show a plan running out — for that you need the duration version.

Why is the projected balance in today's money?

Because the spending figure is. Your annual spending is what a year costs now, and a balance twenty-five years out is a nominal number; subtracting one from the other compares two different currencies and hides the inflation between them. The page divides the return by the inflation rate to remove it, so both sides are in the same units. The assumption this buys is that your contributions rise with inflation as well — if they stay flat in nominal terms, the projection is optimistic.

What does a negative gap mean?

That the projection falls short of the target by that amount, in today's money. Unlike the deposit figure on the savings goal page, this number is deliberately not floored at zero, because a shortfall is the most useful sentence the page produces — the size of it is the size of the problem. A positive gap is the same statement in the other direction: a surplus, which is not automatically spare cash, since it too is a projection rather than a balance.

What if inflation is higher than my return?

The real return goes negative, and the projection ends up smaller than the money you put in — which is what a negative real return means and is a perfectly valid answer. The inflation field itself will not accept a negative number, though: deflation would drive the real return toward infinity and planning for falling prices is not what this page is for. If your expectation is that prices fall, this is the wrong page.

Does the contribution keep up with inflation?

The arithmetic assumes it does. Dividing the return by the inflation rate is equivalent to holding both the balance and the deposits in constant purchasing power, so the model behaves as though the amount you save rises with prices every year. Many people save a fixed nominal amount, which means their real contribution shrinks — and for them this page overstates the projection, by more the longer the term. Entering a contribution that already reflects what you expect to be saving in the middle of the period is a reasonable compromise.

How is this different from the savings goal calculator?

It does not solve backwards, and its target is not an amount. That page takes a figure you want to reach and returns the deposit that gets there; this one takes a saving habit you already have and asks whether it is enough, which needs two inputs that page does not have — annual spending and a withdrawal rate. The two also assume different things about the return: that page uses a nominal expected return, while this one divides out inflation because its answer is compared against a spending figure in today's money.

• Planning for retirement — the consumer-facing version of this question: what retirement income has to cover, why the spending figure is the hard part to estimate, and why a target is a range rather than a number — Consumer Financial Protection Bureau (United States)
• Publication 590-B (2025), Distributions from Individual Retirement Arrangements (IRAs) — Appendix B, Table III (Uniform Lifetime): the divisor at each age, which is the only withdrawal rate in this comparison that rests on a published rule. At 73 the factor is 26.5, so the legally required minimum withdrawal is about 3.77% — a floor, not a safe maximum — Internal Revenue Service (United States)
• Retirement topics — Required minimum distributions (RMDs): the age at which withdrawals stop being optional, and the excise tax on amounts not distributed — the point at which a projection of untouched growth stops describing a real account — Internal Revenue Service (United States)
• 国务院办公厅关于推动个人养老金发展的意见 (State Council General Office, Opinions on promoting the development of private pensions, Guo Ban Fa [2022] No. 7, issued 8 April 2022) — the China-side framework for a fully funded retirement account, with Part 4 setting the annual contribution ceiling at 12,000 yuan. It sets no withdrawal rate and no target multiple; the rate on this page is an input with no regulatory basis in either jurisdiction — General Office of the State Council, China
• 关于个人养老金有关个人所得税政策的公告 (Announcement No. 34 of 2022 on the individual income tax policy for private pensions, Ministry of Finance and State Taxation Administration, China; issued 3 November 2022) — the China-side tax treatment of the same kind of account, and the reason the spending figure on this page should be understood as an after-tax one: the withdrawal is taxed when it happens — Ministry of Finance and State Taxation Administration, China