Retirement Savings Calculator
Calculate the monthly contribution you need to retire comfortably at your target age. Uses your current savings, expected investment return, and a 25× income target based on the 4% withdrawal rule.
About this calculator
This calculator applies two powerful retirement planning concepts. First, it uses the 4% rule to set your retirement nest egg target: Target = desiredAnnualIncome × 25. This represents the lump sum from which you can withdraw 4% per year indefinitely. Next, it grows your existing savings to retirement using compound interest: Future Value of Savings = currentSavings × (1 + r)^n, where r is the expected annual return (as a decimal) and n is years to retirement. The shortfall between the target and the future savings value is then funded by monthly contributions, calculated with the future value of an annuity: Monthly Payment = Shortfall / [((1 + r)^n − 1) / r × 12]. All calculations assume end-of-month contributions and a consistent annual rate of return.
How to use
Assume you are 30, plan to retire at 65, have $20,000 saved, want $60,000/year in retirement, and expect a 7% annual return. Step 1 — Nest egg target: $60,000 × 25 = $1,500,000. Step 2 — Future value of current savings over 35 years: $20,000 × (1.07)^35 = $20,000 × 10.677 = $213,540. Step 3 — Shortfall: $1,500,000 − $213,540 = $1,286,460. Step 4 — Annuity factor: ((1.07)^35 − 1) / 0.07 = 138.237; multiply by 12 = 1,658.84. Step 5 — Monthly contribution: $1,286,460 / 1,658.84 ≈ $775.50. You need to save about $776 per month.
Frequently asked questions
How does the 4% rule determine how much I need to retire?
The 4% rule, derived from the Trinity Study, states that retirees can safely withdraw 4% of their portfolio in year one, then adjust for inflation each subsequent year, with a high probability of not outliving their money over a 30-year retirement. Multiplying your desired annual income by 25 gives you the portfolio size that makes a 4% withdrawal equal your income goal. For example, needing $50,000/year requires $1,250,000 saved. The rule assumes a diversified stock and bond portfolio. Some financial planners now recommend a 3.5% rate for longer retirements.
What expected annual return should I use for retirement calculations?
A commonly used long-term expected return for a diversified equity portfolio is 7% annually, which approximates the historical inflation-adjusted return of the US stock market. More conservative, bond-heavy portfolios might use 4–5%. As you approach retirement, it's prudent to reduce your expected return assumption to reflect a shift to lower-risk assets. Avoid using returns above 8–9%, as they can create dangerously optimistic projections. Run the calculator at both 5% and 7% to see the sensitivity of your monthly contribution.
Why does starting retirement savings early make such a large difference to monthly contributions?
The earlier you start saving, the more years compound interest has to work on your behalf. With decades of compounding, even small contributions can grow into large sums because each year's returns generate their own returns. For example, saving for 35 years at 7% grows your money roughly 10.7×, whereas saving for 20 years only grows it about 3.9×. This exponential difference means someone starting at 25 may need to contribute less than half per month compared to someone who starts at 40 targeting the same goal. Time in the market is the most powerful lever in retirement planning.