Retirement calculators

Two numbers decide a retirement: what you have when you stop, and what rate you can pull out of it without running dry. The 4% guideline comes from studies of historical US markets and assumes a 30 year retirement and a mixed stock and bond portfolio, so treat it as a starting point rather than a law. Everything is shown twice, once in the dollars of the year you retire and once in what those dollars would buy today.

An employer match is the only guaranteed return in investing: contribute enough and the money doubles the moment it lands. Most plans match a fraction of what you put in, up to a cap stated as a percentage of pay, so contributing below the cap leaves cash behind permanently. There is no way to claim a missed year later.

Traditional contributions skip tax today and get taxed on the way out. Roth contributions are taxed today and come out free. If your tax rate is identical at both ends the two produce exactly the same result, so the whole decision turns on which rate is higher. A low earner early in a career usually favors Roth; someone in a peak earning year who expects a quieter retirement usually favors traditional.

This is the retirement projection run in reverse: the balance shrinks as you spend and grows as it earns, and whichever force is larger decides the ending. Withdrawals are raised with inflation each year, because a fixed dollar amount quietly becomes a pay cut. The one thing a smooth average return cannot show is sequence risk: a bad first few years does far more damage than the same bad years arriving late, because there is less left to recover with.

Social Security replaces a share of your career earnings, and the share falls as earnings rise: 90 cents of every dollar at the bottom of the formula, 15 cents at the top. This uses one average salary as a stand-in for the 35 highest years SSA actually indexes and averages, so it is an estimate and not a statement. It leaves out several real things. Benefits are raised for inflation most years and none of that is modelled here. Up to 85% of the benefit can be taxable once other income is counted. Spousal, survivor and divorced-spouse benefits are separate entitlements and can be larger than your own. If you claim before full retirement age while still working, the earnings test withholds part of the benefit and pays it back later. Your real number is on your Social Security statement at ssa.gov, which uses your actual earnings record.

A traditional 401(k) or IRA deferred tax, it did not cancel it, and the RMD rules are how the government collects. Each year you divide the previous 31 December balance by a factor from the IRS table, and the factor shrinks with age, so the share you must take keeps rising. Missing one costs a 25% excise tax on the shortfall, cut to 10% if you fix it quickly. Roth IRAs have no RMD for the original owner, and since 2024 neither do Roth 401(k)s. The projection here grows the balance at a flat rate, which no real portfolio does, and it does not model state tax, Medicare premium surcharges (IRMAA) that a large withdrawal can trigger two years later, or qualified charitable distributions, which can satisfy an RMD without adding to your taxable income.

Everything here is in today's money, which is why the return is converted to a real return rather than a nominal one: a 6% return with 3% inflation buys 2.9% more each year, not 3%. Social Security and most public pensions get a cost of living rise, so treating them as fixed in today's money is roughly right. A private pension usually does not, and will quietly shrink, which the inflation calculator on this page shows. The gap ignores tax entirely, and a traditional 401(k) is taxed on the way out, so the income you need is bigger than the number you spend. It also assumes a level spend, when real retirement spending tends to be high early, lower in the middle and high again at the end when health care arrives.

An annuity is the time value of money run in both directions. Give an insurer a lump sum and it returns a level payment; promise someone a level payment and it has a value today. Payments at the end of each month are an ordinary annuity, payments at the start are an annuity due, and the difference is exactly one period of interest, so an annuity due pays slightly less per month for the same lump sum. What this leaves out is the part that makes a real annuity an annuity: mortality. A life annuity pays until you die rather than for a fixed term, which is insurance against living too long, and it is priced from mortality tables, the insurer's expenses and its profit. A real quote will be below the number here. It also ignores the insurer's credit risk, surrender charges, and the fact that most fixed annuity payments never rise with inflation.

A buyout offer asks you to price your own longevity. The pension is worth more the longer you live and the less you could earn on the money, and the lump sum wins in the reverse case. The implied return is the cleanest way to read it: it is the rate the lump sum would have to earn to produce the same payments over the same years, so beating it means the lump sum is the better deal and falling short means the pension is. What this cannot price is risk. A pension is a promise from an employer, backed in the US by the PBGC up to a limit that can be below a large benefit, while a lump sum is yours and exposed to your own decisions and the market. It also ignores tax, survivor options, whether the pension has a cost of living rise, and the plain fact that a lump sum can be spent and a pension cannot.

A conversion moves money from a traditional account to a Roth and adds the whole amount to this year's taxable income. That is the catch a lot of people miss: a large conversion does not get taxed at your current rate, it stacks on top of your income and fills the brackets above it, so the effective rate on the conversion is usually higher than the rate you started in. The table shows exactly which brackets it fills. The comparison here assumes the tax is paid out of the converted money, which makes the arithmetic honest but understates the case for converting, since paying the tax from a separate savings account gets more money into the Roth. It also ignores state tax, the five year rule on converted amounts, the effect of a higher income on Medicare IRMAA premiums two years later, and the fact that Roth accounts never carry a required minimum distribution.

Catch-up contributions exist because people save most in the last stretch of a career, when the mortgage is smaller and the children have left. From 50 you can put an extra $8,000 into a 401(k) and $1,100 into an IRA, and from 60 to 63 the 401(k) figure rises to $11,250 before dropping back at 64. This assumes you actually fill the room every year, which most people cannot: the money has to come from somewhere. It also assumes a flat return, ignores whether your plan even offers the age 60 to 63 band (plans may but need not), and ignores the SECURE 2.0 rule that requires catch-up contributions to be made as Roth if your prior year wages were above the threshold, which changes when the tax is paid but not the balance.

Coast FIRE is the point where compounding alone finishes the job. Reach it and you still have to earn a living, but you no longer have to save for retirement, which is a very different kind of freedom from not working at all. Everything here is in today's money, so the return is a real return: 7% nominal with 3% inflation is 3.88% real, and using the nominal figure would make the target look far closer than it is. The weakness is the same as every long projection: it assumes a smooth average return over decades, when a poor first decade can leave you short even though the average worked out. It also assumes your target spending does not change, that you never touch the balance, and it ignores tax on withdrawals and any employer match you would give up by stopping.