How This Retirement Calculator Works
This calculator projects your retirement savings based on your current age, savings rate, and expected investment returns. It then compares your projected nest egg to the amount needed to generate your desired annual income using the safe withdrawal rate.
See how compound growth builds your nest egg over time with our Compound Interest Calculator.
The 4% Rule Explained
The 4% rule is a widely-used retirement planning guideline developed from the "Trinity Study." It states that you can withdraw 4% of your portfolio in your first year of retirement, then adjust for inflation each year after, with a high probability that your money lasts 30+ years.
To find how much you need: divide your desired annual income by 0.04. For $60,000/year in retirement income, you need $1,500,000 saved.
This rule assumes a balanced portfolio (roughly 50-60% stocks, 40-50% bonds) and has historically worked in 95% of 30-year periods. Some financial planners now recommend a more conservative 3.5% rate given lower expected future returns.
How Much Do You Actually Need?
Common benchmarks by age (as a multiple of annual salary):
- Age 30: 1x your annual salary saved
- Age 35: 2x your annual salary
- Age 40: 3x your annual salary
- Age 45: 4x your annual salary
- Age 50: 6x your annual salary
- Age 55: 7x your annual salary
- Age 60: 8x your annual salary
- Age 67: 10x your annual salary
These are general guidelines. Your actual need depends on your desired lifestyle, healthcare costs, Social Security benefits, pension income, and where you plan to live.
Case Study: Linda, 42, Targeting Retirement at 62
Linda earns $95,000 per year and wants $70,000 of annual spending in retirement (about 74% of today's pre-tax income). Using the 4% rule, her portfolio target is $70,000 ÷ 0.04 = $1,750,000. She already has $142,000 in her 401(k) and Roth IRA combined and contributes $950 per month ($11,400 per year), including a 4% employer match on the first 6% of salary.
Assuming 7% average annual returns before inflation, her existing balance and contributions grow to roughly $1.62 million by age 62 — about $130,000 short of her goal. To close the gap, she can raise contributions by $175 per month (to $1,125 total), retire at 63 instead of 62, or plan on $65,000 spending ($1,625,000 target), which her projected nest egg nearly covers. She uses this calculator to test each lever before committing. For aggressive early-retirement targets, pair those runs with our FIRE Calculator and the Savings Goal Calculator to back into monthly savings for a fixed deadline.
Nest Egg Targets by Retirement Age
The table below assumes you want $65,000 per year from investments (not including Social Security or a pension). Earlier retirement usually requires a larger portfolio or a lower withdrawal rate because money must last longer.
| Retire at age | Typical withdrawal rate | Portfolio needed ($65k/yr) |
|---|---|---|
| 55 | ~3.25% | ~$2,000,000 |
| 60 | ~3.5% | ~$1,860,000 |
| 65 | 4% | ~$1,625,000 |
| 67 | 4% | ~$1,625,000 |
At 67, many US workers can claim full Social Security, so $65,000 from investments might supplement $24,000-$30,000 in benefits rather than replace an entire paycheck. Retiring at 55 with the same lifestyle often means saving an extra $375,000-$400,000 versus a 65-year-old target, or working part-time for the first decade to limit portfolio withdrawals.
Retirement Account Types
401(k) / 403(b)
Employer-sponsored plans with tax-deferred growth. 2024 contribution limit: $23,000 ($30,500 if age 50+). Many employers match a percentage of your contributions — this is essentially free money.
Traditional IRA
Contributions may be tax-deductible. Growth is tax-deferred until withdrawal. 2024 limit: $7,000 ($8,000 if 50+). Best if you expect to be in a lower tax bracket in retirement.
Roth IRA
Contributions are made with after-tax dollars, but growth and withdrawals are tax-free. Same contribution limits as Traditional IRA. Best if you expect to be in a higher tax bracket in retirement or want tax-free income flexibility.
Not sure which account to use? Compare options in our guide: 401(k) vs Roth IRA: Which Is Better for You?
HSA (Health Savings Account)
Triple tax advantage: tax-deductible contributions, tax-free growth, and tax-free withdrawals for medical expenses. After age 65, can be used for any expense (taxed like a traditional IRA). 2024 limit: $4,150 individual / $8,300 family.
Maximizing Your Retirement Savings
- Capture your full employer match — this is an immediate 50-100% return on your money.
- Increase contributions with every raise — if you get a 3% raise, put 2% more toward retirement. You'll never miss money you never had.
- Keep fees under 0.3% — choose low-cost index funds. A 1% fee vs 0.1% fee can cost you hundreds of thousands over a career.
- Don't touch it early — early withdrawals incur a 10% penalty plus income taxes. Leave it invested.
- Rebalance annually — maintain your target asset allocation to manage risk as you age.
Social Security Considerations
Social Security replaces roughly 40% of pre-retirement income for average earners. The full retirement age is 67 for those born after 1960. Claiming at 62 reduces benefits by ~30%, while delaying to 70 increases them by ~24% versus full retirement age.
For planning purposes, it's prudent to estimate Social Security will cover 25-40% of your retirement income needs and save enough to fund the rest independently.
Frequently Asked Questions
What return rate should I assume?
For a diversified portfolio, 7% (after inflation) is a common assumption for stocks over long periods. If you want to be more conservative, use 5-6%. For a mix of stocks and bonds, 5-6% is appropriate.
When should I start saving for retirement?
Now. Every decade you delay roughly doubles the monthly amount you need to save. Starting at 25 versus 35 means needing to save about half as much per month to reach the same retirement target.
Can I retire early?
Yes, with the FIRE (Financial Independence, Retire Early) approach. This typically requires saving 50-70% of income and accumulating 25-33x your annual expenses. Many FIRE adherents retire in their 40s or 50s by maintaining low expenses and high savings rates.
Planning to retire before 60? Read our guide: How Much Do I Need to Retire at 55?