How the calculation works
Calcist works in three steps, and every number is shown in the result so you can check it.
- Growing your savings. Your savings and monthly deposits (plus anything your employer adds) grow at your yearly return until you retire. A yearly return is turned into the monthly rate that adds up to it over 12 months.
- Today's dollars. Prices rise, so $1 million in 30 years buys much less than $1 million today. Calcist divides the balance by the inflation over those years to show what it's worth in today's money.
- Income in retirement. It then works out the monthly amount, kept in step with inflation, that your savings can pay from the day you retire until the age you plan for, while the rest keeps earning your after-retirement return.
A worked example
A 35-year-old with $50,000 saved puts away $600 a month, earning 7% a year until retiring at 67. Inflation is 3%, the money earns 5% after retiring, and it should last until 90.
- Savings at 67: $1,254,484, which is about $487,162 in today's dollars.
- That can pay about $2,185.88 a month in today's dollars until age 90.
- Wanting $5,000 a month with $2,000 from Social Security leaves $3,000 a month to cover. At that rate the money lasts about 15 years, to age 82.
- To make it last to 90, they'd save about $342.41 more a month. Saving $1,200 a month instead would grow to $2,073,204 and pay $3,612.47 a month.
401(k), 403(b), TSP and IRA
The math is the same for every kind of retirement account: money goes in, it grows, and later you draw it out. Enter your 401(k), 403(b), TSP (Thrift Savings Plan) or IRA balance as "Saved so far", your own contribution as "You save each month", and any employer match under More options. If you have more than one account, add the balances and contributions together.
Already retired, or close? The how long will my money last calculator starts from your balance and shows how long your withdrawals last, year by year.
The 4% rule
A common rule of thumb is that you can take out 4% of your savings in your first year of retirement, then raise it with inflation, and have a good chance of lasting 30 years. Calcist shows that figure too, as a second opinion next to the full calculation.
What this calculator can't know
- Returns aren't steady. Markets rise and fall, and a bad few years just after you retire hurt more than the same drop later. Try a lower return to see a cautious case.
- Taxes. Money from a traditional 401(k) or IRA is usually taxed when you take it out, so enter the income you want before tax.
- Social Security. Your benefit depends on your earnings record and the age you claim. Your estimate is at ssa.gov/myaccount. Calcist assumes it starts when you retire and rises with inflation; many pensions don't, so enter a cautious amount.
This is a planning estimate, not financial advice. For decisions about your retirement, talk to a fee-only financial planner.