How this calculator works
It looks at your plan in two phases, month by month, using the return and inflation you enter.
- Saving. Each month your balance grows by the monthly return (the rate that adds up to your yearly return over twelve months, so 7% a year means the balance grows exactly 7% in a year) and your saving is added. If you enter a yearly increase, the monthly amount steps up once a year.
- Spending. At retirement, the yearly income you want, less Social Security or a pension, is taken out at the start of each month. The rest keeps earning the retirement return. The amount taken out rises with inflation once a year.
"Savings you need" is the amount that, at retirement, would pay exactly the income you want until the age you chose, and leave nothing. "Income your savings can pay" turns the question around: it is the yearly income your projected savings can support to that age. Both are in today's dollars, so they are easy to compare with what you spend now.
Worked example: a 35-year-old, step by step
Take a 35-year-old with $50,000 saved, adding $800 a month, earning 7% a year until 65 and 5% after that, with 2.5% inflation. They want $70,000 a year in today's dollars and expect $24,000 of that from Social Security, so their savings must cover $46,000 a year.
| Step | Result |
|---|---|
| Savings at 65, future dollars | $1,316,175 |
| The same, in today's dollars | $627,477 |
| Savings needed, today's dollars | $972,450 |
| Shortfall, today's dollars | $344,973 |
| Income those savings can pay, today's dollars | $29,682 a year |
| Money runs out at | about age 82 |
| Saving needed to close the gap | $1,419 a month, $619 more than now |
The first row is the standard future-value formula: $50,000 × (1 + 0.5654%)360, where 0.5654% is the monthly rate that adds up to 7% a year, plus $800 times the growth factor for 360 monthly deposits. The calculator agrees with that formula to the cent, and the page will not build if it stops doing so. Inflation is the reason the second row is so much smaller than the first: 2.5% a year for 30 years cuts what a dollar buys by more than half.
What two more years of work does
If the same person works until 67, savings at retirement are $693,085 in today's dollars instead of $627,477. The target also falls to $927,172, because the money now has to last two fewer years. The shortfall shrinks from $344,973 to $234,087, and the money would last to about age 86. Later retirement helps on both sides of the sum.
What saving more does
To close the gap at 65, this person would need to save $1,419 a month from now on. With that amount, savings at 65 equal the target of $2,039,779 in future dollars, and the money lasts to 95. It is a big jump from $800, which is why the yearly-increase box matters: starting lower and raising your saving with every raise is often easier than a large amount today.
Compare with the 25 times rule
A common shortcut says to save 25 times the yearly amount you need from savings. Here that is $46,000 × 25 = $1,150,000. Our model gives $972,450 for the same person. The shortcut is more cautious, partly because real returns arrive unevenly and a bad market early in retirement can do more damage than the same average return in a smooth path. Treat the two numbers as a range, and be wary of a plan that only works at the lower one.
What this calculator leaves out
- Taxes. Withdrawals from traditional 401(k) and IRA accounts are taxed as income, and part of Social Security can be taxed. Results here are before tax.
- Uneven returns. It uses one steady return. Real markets rise and fall.
- Healthcare and one-off costs. These often rise faster than general inflation and are hard to predict.
- Changing spending. Many people spend less as they get older, some spend more on care. The calculator uses one income level.
- Taxes and fees on your investments. Enter a return after fees.
Ways to close a gap
- Save more, and raise it every year. Use the "yearly increase" box to test it.
- Collect the full employer match. It is part of your pay. See the 401(k) calculator for how the match, limits and salary growth work together.
- Retire later, or work part-time for a few years. As shown above, it improves both sides of the sum.
- Check your Social Security estimate at different claiming ages. Full retirement age is 67 for anyone born in 1960 or later, and claiming at 62 cuts the benefit by 30%.
- Lower your target income. Base it on what you actually spend now, less what will end by then, such as a mortgage.
This is an illustration of arithmetic, not a forecast or advice. If retirement is close, or your situation is complicated, a fee-only financial planner can look at your whole picture. To see how your savings grow before retirement, try the compound interest calculator.
Sources and review
The saving phase is the standard future-value formula and the spending phase is the present value of inflation-linked withdrawals. Both are tested against closed-form results. The age facts come from the Social Security Administration: retirement age and benefit reduction and my Social Security. Last reviewed September 2026. Read about our methodology.