Quiz prep
Key ideas to know
For the Retirement Planning Quiz
- Your savings only need to cover the gap. The gap is monthly spending minus guaranteed income, times 12: spending $4,000 with $1,500 from Social Security leaves $30,000 a year.
- Your target is the yearly gap divided by your withdrawal rate. A $40,000 gap at a 4% withdrawal rate needs $1,000,000, before taxes and a safety margin.
- A lower withdrawal rate gives a long retirement more cushion. Early retirees often use 3% instead of 4%; it raises the target, and any fixed rate is a rule of thumb, not a guarantee.
- Every result is in today's dollars. The calculator turns your return into a real, after-inflation return, so your target and projected savings compare in today's buying power.
- You control the levers that close a shortfall. Contribute more, contribute longer, retire a bit later, or plan to spend less; small changes made early matter most.
For the Grow Your Net Worth learning path
- An employer match adds money on top of what you save. Earn $60,000, save 6%, and a 50% match adds $1,800 a year to your $3,600.
The Investing & Retirement Quiz at the end of the path asks about this.
This tool is step 5 of the path: Get your full match and plan for retirement.
Continue the learning pathHow the Retirement Calculator works
The Retirement Calculator estimates how much you need saved to cover your spending in retirement, then compares that target with where your current savings and contributions could be by the time you retire. Everything is in today’s dollars, and the result shows either a surplus or the shortfall you still need to close.
Who it's for
- Anyone who wants a quick check on whether their retirement savings are on track.
- People deciding how much to contribute each month, or for how many years.
- Early retirees testing how a lower withdrawal rate changes the target.
Inputs and assumptions
- Current savings
- Everything earmarked for retirement: 401(k), IRA, and taxable accounts.
- Years to retirement
- How long your savings have to grow before you start withdrawing.
- Monthly contributions
- What you add each month, including any employer match you receive.
- Contribution years
- How many of those years you keep contributing; savings keep growing afterward.
- Expected annual growth
- Your nominal (before-inflation) return assumption.
- Inflation
- Used to convert your nominal return into a real return so every result is in today’s dollars.
- Monthly expenses in retirement
- What you expect to spend each month, in today’s dollars.
- Guaranteed monthly income
- Social Security, a pension, or other income you expect to receive.
- Withdrawal rate
- The share of your portfolio you plan to spend each year.
- Tax rate on withdrawals
- A blended effective rate; use 0% if withdrawals will be mostly from Roth accounts.
- Safety margin
- Extra cushion added on top of the required portfolio.
Methodology
- Your yearly spending gap is monthly spending minus guaranteed income, times 12.
- That gap is grossed up for taxes: gap ÷ (1 − tax rate).
- The required portfolio is the grossed-up gap divided by your withdrawal rate, plus your safety margin.
- Your real return is (1 + growth) ÷ (1 + inflation) − 1.
- Current savings grow at that real return, and monthly contributions compound monthly until retirement.
Full formulas for every tool are on our calculator methodology page.
Worked example
Suppose you have $50,000 saved, 25 years to go, and contribute $800 a month. With a 7% return and 2.5% inflation, your real return is about 4.39%. You plan to spend $4,500 a month, expect $2,000 a month in guaranteed income, and use a 12% tax rate, a 4% withdrawal rate, and a 20% safety margin.
Your gap is $30,000 a year ($34,091 before tax), so the target is about $1,022,727. Projected savings reach about $581,708 in today’s dollars, a shortfall of about $441,019, which tells you how much more saving, time, or spending flexibility the plan needs.
Limitations
- Returns and inflation are constant; real markets move in sequences that can help or hurt.
- Taxes are a single flat rate on withdrawals, and fees are not modeled unless you lower your return.
- It doesn’t model required minimum distributions, Social Security claiming choices, or spending that changes over time.
- A fixed withdrawal rate is a planning rule of thumb, not a promise that savings will last.
Frequently asked questions
What withdrawal rate should I use?
Many people start with 3% to 4% a year; a lower rate leaves more cushion for a long or early retirement. Any fixed rate is a rule of thumb, not a guarantee that your money will last.
Why are results shown in today’s dollars?
The calculator subtracts inflation from your return (using the Fisher equation), so the target and your projected savings are both in today’s purchasing power. That makes the comparison easier to reason about.
Should I include Social Security?
Yes. Enter your estimated monthly benefit as guaranteed income. You can get a personalized estimate from your my Social Security account.
What if the calculator says I have a shortfall?
Try the levers you control: contribute more, contribute for longer, retire a little later, or plan for lower spending. Small changes made early usually matter most.
Disclaimer: This tool provides estimates for general education. It isn't financial, investment, tax, or legal advice, and it can't account for everything about your situation. Consider talking with a qualified professional before making major financial decisions.