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How to Calculate Your Retirement Savings
7 min read
Retirement planning boils down to one question: will your savings last as long as you live? Answering it requires estimating your future expenses, expected investment returns, and how many years you'll spend in retirement. This guide walks through the key concepts and shows how to use our Retirement Calculator for meaningful estimates.
The 4% Rule (and Its Limits)
A common starting point is the 4% rule: if you withdraw 4% of your nest egg in the first year of retirement and adjust for inflation each year, your savings have historically lasted 30 years. This implies a target of 25× your annual expenses.
Example: If you need $60,000 per year, target $1,500,000 in savings.
Limitation: The rule was derived from historical US market data. Lower expected returns, higher fees, a longer retirement, or poor sequence-of-returns risk can all undermine it. Use it as a rough benchmark, not a guarantee.
How Our Calculator Works
Enter your current savings, monthly contribution, expected annual return, and years until retirement. The calculator compounds your contributions monthly to project a final balance. Adjust the return rate to see a range of scenarios—a 6% estimate is more conservative than 8%, both of which have been realistic over long periods historically.
Social Security and Other Income
Our basic calculator estimates accumulated savings, not total retirement income. Remember to account for other income sources: Social Security benefits, pensions, rental income, or part-time work. Subtract these from your annual expense target to determine how much your savings must cover.
Key Levers to Pull
1. Start earlier – even small contributions in your 20s outperform large contributions in your 40s.
2. Increase contribution rate – even 1% more per year compounds meaningfully.
3. Reduce fees – high investment fees silently erode returns over decades.
4. Delay retirement slightly – each extra year adds contributions and subtracts a withdrawal year.
5. Control expenses – a lower expense target drastically reduces the nest egg required.
Try the Retirement Calculator.
Frequently Asked Questions
What rate of return should I use?
Common planning assumptions range from 5% to 8% for diversified equity portfolios. Use a conservative rate (5–6%) for long-term planning to avoid overestimating your nest egg.
Does the calculator account for inflation?
Our basic retirement calculator shows a nominal balance. For a real-terms estimate, subtract expected inflation (typically 2–3% per year) from your assumed return to get an inflation-adjusted rate.