Retirement Calculator

We built our retirement calculator to answer the questions people ask first: How much should we save? When can we retire? and What income can our savings safely support? Numbers are only useful when they change decisions, so this guide explains how to read the results, which levers matter most, and how to move from a projection to a plan we can follow. Along the way we cover Social Security, taxes, investment returns, inflation, healthcare, and the “sequence of returns” risk that makes the first decade around retirement especially important.

What our results mean in plain language

Our calculator shows balances and income in both nominal dollars (future dollars) and today’s dollars (inflation-adjusted purchasing power). If the projection shows $1.5M nominal and $900k in today’s dollars, the second number is the best checkpoint against what life costs now. We also estimate a spending path based on a chosen withdrawal method so we can see how changes ripple through the plan.

The most useful mindset is that a plan is a collection of controllable levers: savings rate, retirement age, spending level, asset allocation, and costs. We can’t pick market returns, but we can pick behaviors. Even small improvements—a 1% higher savings rate, a one-year delay, or a 0.25% fee reduction—compound over decades.

Set the target before we chase numbers

Define the lifestyle we want to fund

Start with expected annual spending in today’s dollars. Split it into essentials (housing, food, utilities, basic transportation, healthcare premiums) and discretionary (travel, hobbies, gifts). If we expect to spend $70,000 per year and Social Security plus any pension covers $30,000, our portfolio needs to fund a $40,000 gap after tax.

Adjust for housing and debt

Housing often drives the budget. Some households carry a mortgage into retirement; others downsize. If the mortgage is paid off, costs may fall; if we move to a higher-tax area, costs can rise. Try two scenarios in our calculator and document the assumption:base case (current home paid off at 65) and alternative (downsize at 68, bank equity, lower taxes).

Include one-time and lumpy costs

Big but irregular expenses—cars, roofs, family travel, home accessibility upgrades—tend to get ignored. Add a modest sinking fund line or plan early-retirement withdrawals for known projects. If a car is replaced every 8 years for $24,000, that’s roughly $3,000 per year in today’s dollars.

Plan for longevity—especially for couples

Retirement can last 30–35 years. A single 65-year-old has meaningful odds of reaching the early 90s; for a couple, the chance that one partner lives past 95 is higher than most expect. We can be conservative by using a longer horizon in our assumptions and by preferring modest real returns.

Map income sources, then solve for the gap

Social Security: maximize lifetime value, not just the earliest check

• Delaying increases benefits. Each year beyond Full Retirement Age earns credits (up to age 70).
• Spousal and survivor benefits change the best claiming strategy; often the higher earner delays.
• Earnings test can reduce early checks if working, but reductions raise later benefits.
• COLA indexing preserves purchasing power over time.

Model two cases—claiming early vs delaying—and notice how portfolio withdrawals change in the early years.

Pensions and annuities

If we have a pension, enter the after-tax amount. For annuities, note whether payments are level, inflation-linked, or variable. Annuities can help cover the floor—essentials that must be paid regardless of markets—at the cost of liquidity.

Rental, business, or consulting income

Side income often declines over time. If we expect part-time work for five years after retiring, include it as a temporary income stream. Lower withdrawals early on can materially improve durability, especially during poor market sequences.

Choose savings vehicles that fit our tax picture

Workplace plans: 401(k), 403(b), 457

• Capture the employer match first—it’s near-instant return.
• Pick pre-tax vs Roth contributions based on our current bracket versus expected retirement bracket.
• Use catch-up contributions after age 50 to accelerate savings.

IRAs: Traditional and Roth

Traditional IRAs defer taxes today; Roth IRAs trade taxes now for tax-free qualified withdrawals later and no required minimum distributions for the original owner. For high earners, a backdoor Roth can work but needs care to avoid pro-rata pitfalls.

Health Savings Accounts (HSA)

HSAs offer triple tax advantages: deductible contributions, tax-deferred growth, and tax-free withdrawals for qualified medical expenses. Many households invest the HSA and reimburse later, effectively creating a healthcare-focused “stealth Roth.”

Taxable accounts and asset location

Taxable brokerage accounts are flexible and useful for early retirees. Place tax-efficient assets (broad equity ETFs) in taxable and less tax-efficient assets (bonds, REITs) in tax-advantaged accounts when possible. Reinvested dividends and capital gains distributions matter for after-tax returns.

Investment returns: realistic, not heroic

Build an allocation we can stick with

Long-term returns arrive with volatility, and our ability to stay invested matters more than squeezing an extra fraction of a percent. A sturdy core is global stocks for growth, high-quality bonds for ballast (including TIPS for inflation protection), and cash for near-term needs. Rebalance on a schedule or when bands are breached.

Sequence of returns risk

If markets fall early in retirement, withdrawals compound losses. Two plans with the same average return can diverge drastically if the order of returns differs. Guardrail withdrawals, dynamic spending, and a modest cash buffer or bond ladder for the first 3–5 years of withdrawals can reduce the damage.

Inflation and “real” returns

We display results in today’s dollars to keep focus on purchasing power. Long-term inflation averages 2–3%, but healthcare can run hotter. When uncertain, we prefer conservative real returns and higher medical inflation.

From nest egg to paycheck: withdrawal strategies that last

The classic 4% rule—a starting point, not a promise

The “4% rule” originated from historical simulations of a balanced portfolio over 30 years. It suggests withdrawing about 4% of the initial portfolio and increasing the dollar amount with inflation each year. It’s a helpful starting point, but today’s yields and valuations argue for flexibility.

Dynamic spending with guardrails

• Pick an initial percentage (for example, 4.5%).
• If the current withdrawal rate drifts above an upper guardrail, trim spending by a set amount (e.g., 10%).
• If it drifts below a lower guardrail, raise spending by the same amount.

Guardrails allow spending to respond to markets while keeping changes manageable.

Variable Percentage Withdrawal (VPW)

VPW recalculates the withdrawal percentage every year based on age and expected returns so the portfolio is targeted to decline across the planning horizon. Withdrawals rise or fall with markets; many retirees like the built-in longevity coverage and accept the variability.

Buckets and cash buffers

A simple bucket method sets aside 1–3 years of spending in cash or short-duration bonds and invests the rest for growth. We refill the bucket after good years and slow refills after bad years. The main benefit is behavioral: fewer panic sales in drawdowns.

Tax-efficient withdrawal order

• Use taxable accounts first (harvest losses when available, manage gains).
• Withdraw from pre-tax accounts to the top of our tax bracket; consider Roth conversions in low-income years before RMDs start.
• Tap Roth last for tax-free compounding and estate flexibility.

If we give charitably after age 70½, Qualified Charitable Distributions (QCDs) can satisfy RMDs without increasing taxable income.

Fees, taxes, and leakages: the quiet killers

Investment costs

Expense ratios, advisory fees, and trading costs compound in the wrong direction. A portfolio with a 0.15% all-in cost versus 1.0% can leave hundreds of thousands more over a long horizon. We prefer broad, low-cost index funds and advisors who act as fiduciaries and focus on planning rather than products.

Taxes today vs taxes tomorrow

We aim to smooth lifetime taxes, not just minimize them this year. After retiring but before Social Security and RMDs, many households have a valuable window for partial Roth conversions. Converting inside lower brackets can reduce future RMDs, provide more Roth flexibility, and help manage Medicare’s IRMAA surcharges.

Behavioral leakages

Stopping contributions in downturns, cashing out when changing jobs, or borrowing from plans does more damage than market volatility. We automate contributions and treat saving as the default.

Healthcare and long-term care

Medicare basics

At 65, most enroll in Medicare. Costs include Part B premiums, Part D for prescriptions, and either a Medigap policy with Part D or a Medicare Advantage plan. Higher incomes trigger IRMAA surcharges; our withdrawal strategy and Roth conversions affect those brackets two years later.

Long-term care (LTC)

Many retirees will need some level of care. Options include self-funding, traditional LTC insurance, and hybrid life/LTC designs. Policies have moving parts—benefit period, inflation rider, elimination period—and insurer strength matters. We like to stress-test: what if one partner needs $120,000 per year for three years?

Real estate decisions that change the math

A paid-off home lowers withdrawal needs. Downsizing can free equity and reduce taxes. For equity access without moving, a HELOC provides flexibility; reverse mortgages are complex but can work in targeted cases, especially as a standby line of credit during bad sequences. If we’re landlords, treat rentals as a business: include vacancy, repairs, capital expenditures, property taxes, insurance, and depreciation recapture at sale.

International moves and geo-arbitrage

Lower-cost locations can materially reduce the required nest egg. Validate residency rules, healthcare access, tax treaties, currency risk, banking, and property rights. Budget for return travel, visa fees, and insurance so the savings are real.

Scenario planning: stress-testing the plan

Lower returns and higher inflation

Run a base case, then reduce returns by 1% and increase inflation by 1%. If we still meet goals with a buffer, the plan is robust. If not, consider saving more, delaying retirement, trimming early-years spending, or taking a bit more market risk if we can tolerate it.

Bear market on day one

Simulate a 20–30% drop in year one. Bucket strategies, guardrails, and even a small part-time income for a few years can protect sustainability by reducing withdrawals during a bad sequence.

Longevity extension

Add five years to the horizon. If the plan only fails at very long lifespans, we can hedge with a longevity annuity (a deferred income annuity starting at age 80–85) to insure the tail risk while keeping most assets liquid.

Reading Monte Carlo results

Monte Carlo explores many return paths. As a rule of thumb, ≥85% success is strong; 70–85% is workable with modest flexibility; <70% suggests adjustments. Use it to compare choices rather than to anchor on one “true” outcome.

Practical implementation: a simple, durable setup

Write a one-page plan (Investment Policy Statement)

• Target asset allocation and rebalancing rule (annual or 5% bands).
• Savings rate and account order: workplace plan to match → HSA → max workplace plan → IRA → taxable.
• Withdrawal method: guardrails, VPW, or fixed with periodic checks.
• Tax playbook: Roth conversion windows, QCDs after 70½, loss harvesting in taxable.
• Behavior rules for market stress (no allocation changes during drawdowns except scheduled rebalance).

Automate contributions and increases

Turn on auto-escalation each year, capture raises, and send windfalls to specific buckets: retirement, emergency fund, near-term goals. Automation beats willpower.

Rebalance with taxes in mind

Prefer to rebalance inside tax-advantaged accounts. In taxable, use new contributions and dividends to nudge weights before selling. When selling is necessary, manage gains thoughtfully.

Worked examples: how the levers move the outcome

Example 1: Late-starter catch-up

Age 45, balances $150k, saving 12% of $120k household income, retiring at 67. Allocation 70/30, fees 0.20%. Social Security projected at $38k in today’s dollars. We lift savings to 16% and delay to 68. The sustainable income jumps meaningfully—contributions and compounding do most of the work.

Lesson: for late starters, savings rate and retirement age beat chasing higher returns.

Example 2: Early retiree with flexibility (FIRE)

Age 35, saving 35% of $150k, aiming to retire at 50. Target spending $48k in today’s dollars. A fixed 4% rule looks tight. Switching to guardrails at a 3.6% initial withdrawal, adding a three-year cash buffer, and planning $12k part-time income for five years improves odds substantially.

Lesson: early retirement usually needs dynamic spending and some income in phase one.

Example 3: High earner minimizing lifetime taxes

Age 58, retiring at 65 with $2.4M pre-tax, $300k Roth, $200k taxable. We plan partial Roth conversions between 65 and 70 inside low brackets, reducing future RMDs and IRMAA exposure while increasing Roth flexibility for late-life spending or bequests.

Lesson: smoothing taxes across decades often beats minimizing this year’s bill.

Quick reference: formulas we use

• Future value: FV = P(1 + r)ⁿ + C × [((1 + r)ⁿ − 1) / r]
• Real return: (1 + real) = (1 + nominal) / (1 + inflation) − 1
• Starting withdrawal guideline: ~3.5–4.0% of portfolio, then adjust with guardrails or VPW
• Required portfolio to fund a gap: Needed = Annual gap ÷ starting withdrawal rate

Bringing it all together

A retirement plan is a living process. We use our calculator to set direction, then we revisit the numbers annually or after major changes. We keep costs low, match allocation to our tolerance for risk, and choose a withdrawal approach we can stick with in calm and in crisis. When surprises arrive, we adjust one or more levers—work a little longer,save a little more, spend a little less, or accept a bit more market risk—and keep moving.

Confidence comes from seeing our choices translated into dollars and years and from practicing those choices over time. That’s the purpose of our retirement calculator: turning abstract goals into a clear, repeatable playbook for the decades ahead.