Retirement Savings Calculator
Estimate how much you can save for retirement, project your monthly income using the 4% rule, and see the impact of inflation on your purchasing power.
Planning for Retirement
Retirement planning is one of the most important financial decisions you will make. The earlier you start, the more time compound interest has to work in your favor. Even small monthly contributions can grow into substantial savings over decades. Someone who starts investing $300 per month at age 25 will accumulate significantly more than someone who starts the same contribution at age 35, even though the difference in contributions is only $36,000. That extra decade of compounding can mean hundreds of thousands of dollars in additional growth.
The 4% Rule
The 4% rule is a widely referenced retirement guideline suggesting you can withdraw 4% of your portfolio in the first year of retirement, then adjust that amount for inflation each subsequent year, with a high probability of your savings lasting at least 30 years. This calculator uses the 4% rule to estimate your potential monthly retirement income. While not a guarantee, it provides a useful starting point for planning.
Employer Match and Inflation
If your employer offers a 401(k) match, take full advantage of it — an employer match is free money that immediately boosts your savings rate. Keep in mind that inflation erodes purchasing power over time. A dollar today will buy less in 30 years, which is why this calculator shows your savings in both nominal and inflation-adjusted terms. Aim to invest in assets that historically outpace inflation, such as diversified stock index funds, to preserve and grow your real wealth.
Frequently Asked Questions
What is the 4% rule?
The 4% rule is a retirement planning guideline suggesting you can withdraw 4% of your portfolio in the first year of retirement, then adjust that amount for inflation each subsequent year, with a high probability of your savings lasting at least 30 years. For example, with $1,000,000 saved, you could withdraw $40,000 per year ($3,333 per month). This rule is based on historical stock and bond market returns.
How much do I need to save for retirement?
A common guideline is to save enough to replace 70-80% of your pre-retirement income. Using the 4% rule, multiply your desired annual retirement income by 25. For example, if you need $60,000 per year, aim for $1,500,000. However, the right amount depends on your lifestyle, healthcare needs, Social Security benefits, and when you plan to retire.
Why does starting early matter so much?
Compound interest means your money earns returns on previous returns. Starting at age 25 versus 35 with $300/month at 7% annual return results in approximately $1,020,000 versus $567,000 by age 65 — nearly double — even though you only contributed an extra $36,000. The earlier you start, the more time compounding has to multiply your savings.
What annual return should I expect?
The S&P 500 has historically returned about 10% annually before inflation, or roughly 7% after inflation. A balanced portfolio of stocks and bonds might return 6-8% annually. Conservative portfolios with more bonds may return 4-6%. The return you use should reflect your investment mix and risk tolerance. Lower assumed returns provide a more conservative projection.
Should I contribute to a 401(k) or IRA?
If your employer offers a 401(k) match, contribute at least enough to get the full match — it is an immediate 50-100% return on your money. Beyond the match, both 401(k) and IRA accounts offer tax advantages. Traditional accounts give you a tax deduction now but you pay taxes on withdrawals. Roth accounts use after-tax money but withdrawals in retirement are tax-free.