Retirement Savings Calculator

At 2.5% inflation your balance loses 55% of its purchasing power over the next 32 years. A $1,968,878 account sounds like generational wealth; $893,419 is what it actually buys. Every figure on this page that matters — the monthly income, the Social Security comparison — is stated in today’s money for exactly this reason. If you budget in future dollars, you will overspend.

The sustainable figure assumes your 7% arrives smoothly every single year for 57 years. It never does. The 4% rule is deliberately lower ($2,978.06 a month) because it was built to survive a bad first decade: if the market halves in year two of retirement, a fixed dollar withdrawal is suddenly taking twice as much of what is left, and the sequence — not the average — is what decides whether you run out. Treat $2,978.06 as the plan and the higher number as the ceiling you can spend into when markets have been kind.

Every figure here is gross of fees. Run the same plan at 6.0% instead of 7% and the balance lands at $706,456 in today’s money rather than $893,419 — $186,963 handed over, which is 21% of the pot. A 1% expense ratio is not unusual in a fund menu. Index funds in the same category often charge 0.03%–0.10%. This is the single most controllable line in the entire model.

Money in a traditional 401(k) or IRA has never been taxed, so every withdrawal is taxed as ordinary income — not at capital-gains rates. If your plan is to pull $2,978.06 a month from a pre-tax account, budget the tax out of it. Roth balances are the other way round: taxed on the way in, free on the way out, and they do not carry required minimum distributions. The mix you hold at retirement matters as much as the total.

The model keeps the contribution at a fixed dollar amount, which is the cautious choice — most people raise it as their pay rises. In real terms a flat contribution shrinks: your final deposit buys what $418.60 buys today. Raising the amount by the inflation rate each year would produce a materially larger balance, and a raise you save before you ever see it is the version you will not undo.

The account is still not empty after 25 years at this withdrawal rate. That makes 92 the plan’s largest single assumption, and it is not one you get to observe in advance. Life expectancy is an average, not a deadline — roughly half of people outlive it, and a married couple only needs one of them to. Healthy 65-year-olds who plan to 92 are planning for the middle of the distribution. Add five years to the horizon and the monthly figure drops noticeably; that drop is the price of the insurance.

Holding one inflation-adjusted number for 25 years is the assumption that makes this arithmetic tractable, and research on actual retiree behaviour suggests it is conservative on average: real spending tends to drift down through the middle of retirement before health costs push it back up, and households in the top third of the wealth distribution often spend far less than they could. The same research says something less comfortable about the first decade — the go-go years are the expensive ones, and they also happen to be the years when a market decline does the most damage to a withdrawal plan.