🏦 Retirement Calculator
See how your retirement savings will grow over time. Enter your current age, savings, monthly contributions, and expected return to project your nest egg and monthly retirement income.
How Retirement Savings Grow
Retirement savings grow through compounding — earning returns not just on your contributions but on all previous returns as well. Over 30 or 40 years, this creates an exponential growth curve where the later years generate far more growth than the early ones. This is why starting early, even with small amounts, has such a disproportionate impact on the final balance. Missing a decade of contributions in your 20s can cost more than doubling your contributions in your 40s.
The 4% Withdrawal Rule
The "4% rule" is a widely used guideline from the 1994 Trinity Study suggesting that retirees can withdraw 4% of their portfolio in the first year of retirement, then adjust for inflation annually, with a high probability of the portfolio lasting 30 years. To determine how much you need to retire, divide your expected annual expenses by 0.04 — a $60,000/year lifestyle requires roughly $1.5 million. This is a starting point, not a guarantee; actual outcomes depend on market returns and retirement duration.
401(k), IRA, and Roth Accounts
Traditional 401(k) and IRA contributions reduce your taxable income now, and you pay tax on withdrawals in retirement — beneficial if you expect to be in a lower bracket then. Roth contributions are made with after-tax dollars, and qualified withdrawals in retirement are completely tax-free — beneficial if you expect to be in the same or higher bracket in retirement. Many financial planners recommend contributing to both types for tax diversification. For 2024, the 401(k) contribution limit is $23,000, plus a $7,500 catch-up contribution if you're 50 or older.
Making Your Retirement Number Real: Benchmarks and Strategy
Fidelity Investments publishes widely used retirement savings benchmarks: you should aim to have 1× your salary saved by age 30, 3× by 40, 6× by 50, 8× by 60, and 10× by retirement. These aren't magical thresholds — they are estimates designed to keep a typical household on track to replace 45% of pre-retirement income through savings, with Social Security covering the rest. Someone earning $75,000 should target approximately $750,000 in savings by age 67. If you are behind these benchmarks, the most powerful levers are increasing your savings rate (even from 10% to 15% of income makes an enormous difference over a career), extending your working years by a few years, or planning to spend less in retirement.
Sequence of Returns Risk
One of the most important — and most overlooked — retirement planning concepts is sequence of returns risk. This refers to the danger of experiencing poor investment returns early in retirement, when your portfolio is largest and when withdrawals have the most permanent impact. Two retirees can have identical average returns over a 30-year retirement but vastly different outcomes depending on when those returns occur. If you retire in a market downturn and withdraw 4% of a portfolio that has already dropped 30%, you are selling shares at depressed prices — reducing the base that will recover when markets rebound. Strategies to mitigate this risk include maintaining 1–2 years of cash reserves to avoid selling equities at lows, using a "bucket" strategy (holding bonds for near-term needs, stocks for long-term growth), and adjusting withdrawal rates flexibly when markets underperform.
Common Mistakes in Retirement Planning
The most consequential mistake is cashing out a 401(k) when changing jobs. Doing so triggers immediate income tax on the entire amount plus a 10% early withdrawal penalty — a 30–40% haircut on money that could have compounded for decades. Rolling the balance into an IRA or your new employer's 401(k) avoids this entirely. A second mistake is assuming that Social Security alone will cover retirement income needs. The average Social Security retirement benefit in 2024 was about $1,907 per month ($22,884 per year) — barely above the poverty line for a couple. A third error is using an overly optimistic return assumption (8–10%) for projections while ignoring fees. An actively managed fund charging 1.2% annually returns 30% less to you over 30 years than an index fund charging 0.05% — even with identical gross performance.
Real-World Example: The Cost of Starting Late
Two savers, both targeting retirement at 65. Alex starts contributing $300/month at age 25 and invests for 40 years at an average 7% annual return. The total nest egg: approximately $799,000. Jordan starts contributing $500/month at age 35 — more per month — but invests for only 30 years. Total nest egg: approximately $567,000. Alex contributes $144,000 in total; Jordan contributes $180,000. Yet Alex ends up with $232,000 more — entirely due to compounding on the extra decade. The moral is stark: time in the market matters more than the amount contributed per month, particularly in early career years. Our Compound Interest calculator lets you explore these compounding dynamics in detail, and the Inflation calculator helps you check whether your projected nest egg keeps pace with future purchasing power.