Retirement Calculator

The two halves of the retirement question

Retirement planning is two separate problems wearing one coat. The accumulation problem asks how big a pot you can build before you stop working. The decumulation problem asks how long that pot survives once you start spending it while inflation keeps pushing your costs up. This calculator runs both, which is why it can tell you the age at which the money runs out rather than just quoting a total.

The 4% rule and the 25× rule

The rule of thumbPot needed ≈ annual spending × 25 Safe withdrawal ≈ 4% of the starting pot, rising with inflation

These come from studies of historical US market returns showing that a balanced portfolio survived a 30-year retirement in almost every starting year at a 4% initial withdrawal. They are a sanity check, not a law. Longer retirements, higher fees, lower expected returns and bad luck in the first few years all argue for something closer to 3.5%.

Worked example

If you want $60,000 a year in today's money and retire in 30 years with 2.5% inflation, the first year actually costs about $125,900. Twenty-five times that is roughly $3.15 million — a number that shocks people, and the reason inflation deserves its own field.

The accounts you save into matter as much as the amount

Two people can save the same money for the same years and end up with very different spendable amounts, purely because of which wrappers they used.

Employer matching first. A 50% match on the first 6% of salary is an instant 50% return. Not capturing the full match is the most expensive common mistake in retirement saving, and it is entirely free to fix.
Tax-deferred vs. tax-free. A traditional 401(k) or pension cuts your tax bill now and is taxed on withdrawal; a Roth or ISA is funded after tax and comes out free. The rule of thumb: choose tax-deferred if you expect a lower tax rate in retirement, tax-free if you expect a higher one. Holding some of each hedges the guess.
Fees compound against you. A 1% annual fee over 30 years can consume a fifth to a quarter of the final pot. Check the expense ratio of every fund you hold; it is usually the easiest large saving available.
Order of operations. Capture the full match, clear high-interest debt, build an emergency fund, then maximise tax-advantaged space, then invest in a taxable account.

One more thing this projection cannot show: sequence-of-returns risk. A market fall in your first few years of withdrawals damages a portfolio far more than the same fall during accumulation, because you are selling units to live on while prices are low. The common defence is holding two to three years of spending in cash and bonds as you approach retirement, so you never have to sell shares into a crash.

What moves the needle most

Ranked roughly by impact, from an ordinary starting position:

Working two or three years longer. It adds contributions, adds growth, and removes years of withdrawals — it hits the problem from three sides at once.
Raising the monthly contribution. Especially early, when it has the most time to compound.
Spending less in retirement. A 10% lower target cuts the required pot by 10%.
Higher returns. Real, but the least controllable and the riskiest to assume.

Not modelled here: Social Security, state pensions, annuities, part-time income, downsizing a home, or healthcare shocks. Most people will have at least one of those, in both directions.

Frequently asked questions

What if I am starting late?

Later is genuinely harder but far from hopeless. The three levers are saving substantially more, working a few years longer, and lowering the target income — and combining all three is much more effective than maximising any one. Working three extra years is unusually powerful because it adds contributions and growth while removing years of withdrawals.

Should I pay off my mortgage before retiring?

Entering retirement without a mortgage sharply reduces the income you need, which lowers the pot required and cuts sequence-of-returns risk. Whether it beats investing the money depends on your rate: against a 3% mortgage the arithmetic often favours investing, against 6% or more it usually favours paying down.

How much do I need to retire?

A common starting point is 25 times your desired first year of retirement spending, which corresponds to a 4% initial withdrawal rate. Adjust upward for early retirement, long life expectancy or high fees, and downward if you will receive a meaningful pension or Social Security benefit.

Is the 4% rule still safe?

It is a reasonable planning anchor, not a guarantee. It was derived from historical US data over 30-year retirements. Retiring earlier, living longer, or facing lower expected returns all justify a more conservative 3.25–3.75% starting rate, with the flexibility to spend less in bad years.

Does this calculator include Social Security or a state pension?

No, deliberately — those amounts vary enormously by country and career. If you expect $24,000 a year of guaranteed income, subtract it from your target income before entering it, and the result reflects only what your own savings must cover.

What return should I assume in retirement?

The drawdown model here uses a conservative 5%, on the basis that most portfolios shift toward bonds as you age. If you plan to stay heavily in equities you might justify more, at the cost of much greater year-to-year uncertainty.