Retirement calculator
What your savings will support in retirement, in today’s money — the balance you reach, the spending it sustains, and the age it runs out if you spend more.
Sustainable spending each year
$84,233
In today's money, to age 92, at a 4.4% real return
- Balance at 65
- $1,317,229
- Money lasts to
- 92
- Annual shortfall
- $0.00
| Starting balance | $180,000 |
|---|---|
| Contributions to 65 | $450,000 |
| Real return applied | 4.39% |
| Balance at retirement | $1,317,229 |
| Supports spending of | $84,233 |
- Every figure is in today’s money: the return is deflated by inflation, so a $60,000 answer means $60,000 of today’s purchasing power.
- Excludes any state pension or social security, which usually covers part of this spending.
At 7% nominal against 2.5% inflation the real return is 4.4%, not 4.5% — and every figure here is stated in today’s purchasing power rather than inflated dollars.
How this is calculated
How this is calculated
Everything is in today’s money
A projection that promises $2.4m at 65 sounds precise and tells you nothing, because $2.4m in 25 years buys what about $1.29m buys now at 2.5% inflation. Deflating the return keeps every number comparable to your current cost of living.
real rate = (1 + nominal) ÷ (1 + inflation) − 1Subtracting inflation from the return is wrong
7% minus 2.5% is 4.5%, but the correct real rate is 4.39%. Over 25 years on $180,000 that shortcut overstates the balance by several percent — small per year, material by retirement.
Sustainable spending is an annuity, not 4%
Given a balance, a real return and a horizon, the spending that lands exactly at zero is the annuity payment. On a 27-year horizon at a 4.4% real return that is about 6% of the balance a year, well above the familiar 4% rule of thumb built for uncertainty rather than arithmetic.
spending = balance × r ÷ (1 − (1 + r)^−years)Worked example: Age 40, $180,000 saved, adding $18,000 a year, retiring at 65
| Saved | $180,000 |
|---|---|
| Adding | $18,000 a year |
| Retire at | 65 |
| Return | 7% against 2.5% inflation |
| Real return | 4.39% |
|---|---|
| Horizon | 27 years of drawdown |
| All figures | Today’s money |
Retiring at 62 instead of 65 removes three years of contributions and adds three years of spending — usually a bigger swing than any plausible change in the return assumption.
What this assumes
- A constant real return through accumulation and drawdown.
- Contributions and spending are level in real terms.
- No state pension or social security included.
- No tax on the balance or withdrawals.
Where this commonly goes wrong
- Sequence risk is invisible here: a poor first five years of retirement damages a portfolio far more than the same losses later, which an average return cannot show.
- Spending is rarely flat — it typically falls in the seventies and rises again with care costs, so a single figure understates both ends.
- Ignoring the state pension usually makes the picture look worse than it is; most people need the portfolio to cover only the gap above it.
Questions
How much do I need to retire?
Enough that the sustainable withdrawal covers your spending gap after any state pension. Working backwards from spending is more reliable than a headline number: $65,000 a year over 27 years at a 4.4% real return needs roughly $1.05m in today’s money.
What return should I use in a retirement projection?
A diversified portfolio has historically delivered around 7% nominal before fees, but the figure that matters is the real return after inflation — about 4.4% at 2.5% inflation. Use the real number and every projection stays in today’s money.
Is the 4% rule reliable?
It came from a study of 30-year US retirements and is a rule of thumb, not arithmetic. Longer horizons and lower expected returns argue for 3% to 3.5%; shorter ones support more. This tool solves for the exact horizon instead.
What difference does retiring later make?
More than almost any other lever. Three extra years adds three years of contributions and compounding while removing three years of drawdown — commonly a 15% to 20% swing in sustainable spending.
Should I include the state pension?
Yes, when planning, but as a separate line. Most systems pay a meaningful base amount, so the portfolio only needs to fund the gap above it. Leaving it out entirely is the most common reason projections look impossible.
What is sequence of returns risk?
The danger of poor returns in the first years of retirement, when withdrawals lock in losses. Two retirees with identical average returns can end very differently depending on the order — which is why a cash buffer of one to two years is common advice.
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Sources
This calculator does arithmetic on the figures you enter. It does not account for tax, fees, or your personal circumstances.
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