How the Retirement Calculator Works
The calculator projects your current savings growing at the annual return rate, plus the future value of your monthly contributions, to estimate total savings at retirement. It then applies the 4% rule to determine how much you need based on your desired monthly income minus expected Social Security income. The gap tells you whether you're on track or how much extra you need to save.
The 4% Rule
The amount needed = (desired monthly income - Social Security) x 12 x 25. If your projected savings exceed this amount, you have a surplus. If they fall short, the calculator shows how much more you'd need to contribute monthly to close the gap.
Frequently Asked Questions
A common rule of thumb is the 4% withdrawal rule: multiply your desired annual retirement income by 25. For example, if you want $60,000 per year in retirement, you need approximately $1,500,000 saved (60,000 x 25). This assumes your savings will last 30 years with a balanced portfolio, adjusted annually for inflation.
The 4% rule, derived from the Trinity Study, suggests that retirees can withdraw 4% of their portfolio in the first year and adjust for inflation annually, with a high probability of the portfolio lasting 30 years based on historical stock and bond returns. It is a guideline, not a guarantee, and assumes a diversified portfolio.
The answer depends on your age, current savings, target retirement income, and assumed return. As a general benchmark, Fidelity recommends saving 15% of gross income annually for retirement, including any employer match. This calculator shows the exact monthly savings required for your specific situation.
Social Security provides a guaranteed income floor in retirement. The average monthly benefit in 2025 is approximately $1,900 for retired workers. You can get your projected benefit estimate at ssa.gov. This calculator lets you enter your expected Social Security benefit so you can see how much additional savings you need.
Historically, a diversified 60/40 stock-bond portfolio has returned roughly 7-8% annually before inflation. Conservative assumptions (5-6%) are safer for planning purposes. This calculator uses whatever return rate you enter; more conservative estimates are recommended for planning.
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