Retirement Gap Calculator
Reveals how much annual income your current retirement savings and guaranteed benefits fall short of your target. Use it to identify funding gaps before retirement and adjust your savings plan accordingly.
About this calculator
The retirement gap is the difference between the income you need and the income your current resources can generate. The formula is: Gap = max(0, requiredIncome − socialSecurityBenefit − pensionBenefit − (currentSavings × 0.04)). The term currentSavings × 0.04 applies the 4% safe withdrawal rule to estimate how much annual income your investment portfolio can sustainably produce. Social Security and pension benefits are subtracted as guaranteed income sources that reduce the gap. If the result is zero, your current resources are sufficient. A positive gap number tells you exactly how much additional annual income — and therefore additional savings — you need to accumulate before retiring.
How to use
Suppose you need $70,000/year in retirement. You expect $18,000/year from Social Security, $0 pension, and have $500,000 saved. Step 1 — Portfolio income: $500,000 × 0.04 = $20,000/year. Step 2 — Total covered income: $18,000 + $0 + $20,000 = $38,000/year. Step 3 — Gap: $70,000 − $38,000 = $32,000/year. You have a $32,000 annual income gap. To close it, you'd need an additional $800,000 in savings ($32,000 / 0.04) or other income sources.
Frequently asked questions
How do I calculate how much more I need to save to close my retirement income gap?
Divide your annual income gap by 0.04 (the 4% withdrawal rate) to find the additional lump-sum savings required. For example, a $20,000 annual gap requires $500,000 more in savings to close completely. You can then use a future-value calculator to determine how much to save each year to reach that target by your retirement date. Reducing expenses, delaying retirement by a few years, or increasing Social Security benefits by claiming later are alternative ways to close the gap without saving more.
What counts as guaranteed retirement income when calculating my retirement gap?
Guaranteed income includes Social Security benefits, defined-benefit pension payments, annuity income, and any rental income from real estate you plan to hold in retirement. These predictable income streams reduce the amount your investment portfolio needs to generate. Part-time work income is sometimes included but is less reliable long-term. The retirement gap calculator focuses on Social Security and pension as the two most common guaranteed sources, but you should factor in any other fixed income streams relevant to your situation.
Why does the retirement gap calculator use 4% to estimate income from savings?
The 4% rule is the most widely accepted benchmark for estimating how much a retirement portfolio can safely generate each year without being depleted over a 30-year period. Multiplying savings by 0.04 converts a lump sum into a sustainable annual income figure. While not guaranteed — actual outcomes depend on market performance and sequence of returns — it provides a consistent and historically grounded baseline for gap analysis. Retirees who expect a longer retirement or more conservative market conditions should consider using 3–3.5% instead.