Retirement Calculator

What this calculator is, and when to reach for it

Retirement planning asks two questions that are easy to confuse. What will I have? And what will I need? This calculator answers both and reports the distance between them, which is the only figure that actually tells you whether to change anything.

The projection side is ordinary compounding: what you have saved, plus what you keep adding, grown at a rate you choose over the years remaining. The target side works backwards from the income you want, using a withdrawal rate to convert an annual figure into the sum required to sustain it.

What makes this page unusual is that it shows the target twice — once in today’s money and once adjusted for inflation to the year you retire. Those two numbers are startlingly different over a thirty-year horizon, and the gap between them is where most retirement plans quietly fail.

Reach for it when you want to know whether your current saving is roughly on track, when testing what a higher contribution or a later retirement date would do, or when you want to see the inflation effect stated plainly rather than assumed away.

Why the target appears twice

If you say you want 60,000 a year and apply a 4% withdrawal rate, the arithmetic gives 1,500,000. That figure is correct and expressed in today’s money — it is what you would need if you retired tomorrow.

But you are not retiring tomorrow. Thirty years of inflation means the lifestyle 60,000 buys today will cost considerably more by then, and the sum required to fund it grows in the same proportion. Comparing a projection of future money against a target in today’s money is comparing two different units, and it flatters the plan enormously.

The page reports both deliberately, and labels which is which. The inflation-adjusted target is the one to plan against; the today’s-money figure is retained because it is the number most people have in their head.

Where to go next

To explore the projection mechanics on their own, the compound interest calculator shows how contributions and growth divide, and the investment return calculator shows how sensitive any long projection is to the return you assume.

Because the largest lever for most households is freeing money to contribute, the credit card payoff calculator and debt consolidation calculator are often more relevant than any adjustment here, and the mortgage payoff calculator shows what clearing housing costs before retirement would take.

If housing forms part of the plan, the home equity calculator shows what has been built, and the recast calculator shows one way to convert a lump sum into lower fixed outgoings.

How the projection and the target are worked out

Two independent calculations that are only compared at the end: what you will have, and what you will need.

projection = S(1 + a)^y + C × [ ((1 + r)ⁿ − 1) ÷ r ]   |   target = (income × (1 + i)^y) ÷ w

S

current savings, grown at the annual return over the years remaining

C

the monthly contribution, grown across every month remaining

i

the annual inflation rate applied to the income you want

w

the withdrawal rate used to convert income into a required sum

What the withdrawal rate represents

It is the share of a portfolio you draw each year, and dividing your desired income by it gives the sum required to sustain that income. A 4% rate implies you need twenty-five times your annual income; 3% implies thirty-three times.

Small changes in this figure move the target enormously, which is why it deserves as much thought as the return assumption. It is a planning convention rather than a law, and the appropriate figure depends on how long the money must last and how it is invested.

Why inflation is applied to income rather than to savings

Your projection is already in future money, because it grows nominal contributions at a nominal return. The income you specified is in today’s money, because that is how people think about lifestyle.

To compare them honestly, one side has to move. This calculator inflates the income to the year of retirement, which brings both figures into the same units. Applying inflation to the savings side instead would produce the same insight expressed differently, but it would obscure how much the income requirement itself has grown.

The two levers that actually work

Contributions and time. Raising the monthly amount adds directly and compounds; delaying retirement adds years of both contribution and growth while simultaneously reducing the number of years the money must last.

Raising the assumed return is not a lever, though it is the most tempting adjustment. Changing a number in a model does not change your position, and reaching for higher returns to close a gap usually means accepting risk that does not suit a goal with a fixed date.

What this deliberately excludes

State pensions and other government benefits, workplace pensions beyond what you enter as savings, taxes on contributions or withdrawals, required minimum distributions, healthcare costs, and any inheritance. All of these vary so completely by country that including one would mislead everyone else.

That makes the output a picture of your own accumulated savings against your own stated requirement. For many households, benefits will cover a meaningful share of the target, so a gap here does not automatically translate into a shortfall in retirement.

What this page assumes

It grows your current savings and your monthly contributions at the return rate you entered, counting each contribution at the end of the month. It then raises the income you want by 3% a year for inflation and compares the projection with the savings that inflated income would need.

Years to retirement is your retirement age minus your current age. The income you want is raised by 3% a year over those years, then divided by the withdrawal rate to give the savings target. So a 4% withdrawal rate means a target of 25 times that inflated income.

Worked examples, step by step

Take someone aged 35 planning to retire at 65, with 50,000 saved, contributing 800 a month, assuming a 7% return, wanting 60,000 a year in today’s money, at a 4% withdrawal rate and 3% inflation.

What you will have against what you will need

Against the today’s-money target of 1,500,000, the projection of 1,316,174.83 looks close — a gap of under 184,000, which feels manageable. That comparison is the one most people make, and it is comparing two different units.

Against the inflation-adjusted target the picture changes completely. The 60,000 of income becomes 145,635.75 a year by 2055, requiring 3,640,893.71 at a 4% withdrawal rate, and the shortfall is 2,324,718.87.

Why the second number is the honest one

The projection of 1,316,174.83 is in 2055 money — it grew nominal contributions at a nominal return. The 1,500,000 target is in 2025 money. Setting them side by side compares a future figure against a present one and makes the plan look far healthier than it is.

Thirty years at 3% inflation multiplies a price by roughly 2.43, which is the entire distance between the two targets. Nothing about the saver changed; only the unit of measurement.

What actually closes a gap this size

A shortfall of this magnitude is not closed by adjusting a spreadsheet. The realistic responses are contributing substantially more, working longer, or revising the income requirement — and in practice usually some combination of all three.

It is also worth noting what the model excludes. State and workplace pensions are outside this calculation entirely, and for most households they will cover a meaningful portion of the requirement. A gap here is a signal to establish what those provide, not a verdict on your retirement.

The vocabulary, on and around this page

Projected retirement savings

What your current savings and continuing contributions are expected to become by your retirement date, in future money.

Target savings

The sum required to sustain your desired income at the chosen withdrawal rate. Reported both in today’s money and inflation-adjusted.

Withdrawal rate

The share of a portfolio drawn each year in retirement. Dividing desired income by it gives the sum required.

The 4% convention

A widely cited withdrawal rate implying you need twenty-five times your annual income. A planning convention, not a rule.

Inflation adjustment

Growing today’s desired income into the money of your retirement year, so the target and the projection share units.

Today’s money

A figure expressed in current purchasing power. Intuitive to think in, and misleading if compared against a future projection.

Future money

A figure expressed in the currency of a later year. Projections are naturally in these units because they grow nominal amounts.

Unit consistency

Comparing two figures expressed in the same money. Failing it is the most common error in retirement planning.

Estimated gap

The distance between projection and target. Only meaningful when both sides are expressed in the same units.

Years to retirement

The span over which contributions compound and inflation accumulates. It drives both sides of the comparison.

Monthly contribution

The amount added each month. One of only two levers that genuinely change your position.

Annual return assumption

The growth rate applied to savings. Adjusting it changes the model without changing your actual circumstances.

Nominal growth

Growth before inflation, which is what the projection uses and why the target must be inflated to match.

Real growth

Growth after inflation, representing genuine gains in purchasing power rather than in numbers.

Sequence of returns risk

The danger of poor returns early in retirement, which does lasting damage when withdrawals are being made.

Longevity risk

The possibility of outliving your savings, which is what a conservative withdrawal rate is designed to guard against.

Accumulation phase

The years spent building savings before retirement, which is the period this calculator models.

Decumulation phase

The years spent drawing down savings. Governed by the withdrawal rate rather than by contributions.

State and workplace provision

Pensions outside this calculation. For many households they cover a meaningful share of the target.

Employer match

Contributions an employer adds to your own. Usually the highest-return money available and worth capturing before anything else.

Common mistakes, and what this page will not do

• Comparing a future projection against a today’s-money target. The example looks 184,000 short against 1,500,000 and is actually 2,324,718.87 short against the inflation-adjusted 3,640,893.71.
• Assuming inflation is a minor adjustment. Thirty years at 3% multiplies the required sum by roughly 2.43, turning a 60,000 income requirement into 145,635.75.
• Raising the assumed return to close a gap. Changing a model input does not change your position, and reaching for return on a fixed-date goal means accepting unsuitable risk.
• Treating 4% as a rule. It is a planning convention. Small changes move the target enormously — 3% requires thirty-three times income rather than twenty-five.
• Forgetting what the model excludes. State and workplace pensions, taxes, and healthcare sit outside it entirely, so a gap here is not a complete picture.
• Delaying contributions while a gap looks unbridgeable. Every year of delay removes the contributions that would have compounded longest, widening the very gap that prompted the hesitation.
• Overlooking an employer match. It is usually the highest-return money available and should be captured before any other adjustment to a plan.
• Planning income without testing the requirement. The income figure drives the entire target. Revising it is as legitimate a lever as contributing more or working longer.
• Ignoring the risk of poor returns early in retirement. A fixed-rate projection cannot show sequence risk, which matters far more once withdrawals begin than during accumulation.

What this calculator leaves out: This calculator applies inflation only to the income you want, at the rate you set. It excludes state pensions and government benefits, workplace pensions beyond savings you enter, taxes on contributions or withdrawals, required minimum distributions, healthcare costs, market volatility, and sequence of returns risk. Nothing shown is guaranteed.

Frequently asked questions