Quick Answer: Estimate how much you may have at retirement, how much you may need, and whether current savings contributions are on track for your target retirement income.
How This Calculator Works
This retirement calculator projects savings growth before retirement, adjusts target income for inflation, estimates the nest egg needed to fund retirement withdrawals, and compares the result with the projected portfolio balance.
Worked Scenario: Scenario: Testing Retirement Readiness
A 35-year-old with 75,000 saved contributes 750 per month and wants to retire at 67 with income equal to 80% of a $90,000 salary.
Scenario Inputs
- Current savings: $75,000
- Monthly contribution: $750
- Retirement target: Age 67, 80% income replacement
Outcome: The calculator projects the retirement balance, estimates the nest egg required for the target income, and shows whether the plan has a surplus or shortfall.
Formula and Methodology
Projected savings = Current savings (1 + r)^n + Monthly contribution (((1 + r)^n - 1) / r)
Desired income at retirement = Current income Replacement rate (1 + inflation)^years
Required nest egg = Present value of inflation-adjusted retirement income over retirement years
Funding ratio = Projected savings / Required nest egg * 100
Variables
- r: Monthly pre-retirement return assumption
- n: Number of months until retirement
- Replacement rate: Desired retirement income as a percentage of current income
Assumptions
- Monthly contributions are made at the end of each month.
- Return and inflation assumptions are constant for the full projection period.
- Retirement need is modeled as an inflation-adjusted annual income stream from retirement age to life expectancy.
Limitations
- The calculator does not model taxes, account limits, Social Security, state pensions, employer matches, market volatility, or sequence-of-returns risk.
- Actual retirement outcomes can vary materially from steady-return projections.
- Use this as an educational planning estimate, not as financial advice.
Practical FAQs
How much do I need to retire?
A common approach is to estimate the annual income you want in retirement, adjust it for inflation, and calculate the portfolio needed to support that income over your retirement years.
What does funded ratio mean?
Funded ratio compares projected retirement savings with the estimated nest egg required. A funded ratio above 100% indicates a projected surplus under the assumptions used.
Does this include Social Security or pension income?
No. This global calculator focuses on personal savings. If you expect pension, Social Security, or rental income, you can lower the replacement-rate target to reflect those outside income sources.