Retirement Calculator

Our retirement calculator helps you project your retirement savings and determine if you're on track to meet your financial goals. Here's how to use it effectively:

1. Enter your personal information - Your current age, expected retirement age, and life expectancy. These factors determine your saving timeline and how long your money needs to last.
2. Input your current savings and contributions - Include your current retirement account balances and how much you plan to contribute annually. You can also specify an annual increase rate for your contributions.
3. Set investment and inflation assumptions - The expected rate of return on your investments and the anticipated inflation rate affect your projected savings growth and purchasing power.
4. Define your retirement income needs - Specify your desired annual income in retirement, along with expected Social Security benefits and any other income sources.

After entering these values, the calculator will show your projected savings at retirement, the savings required to meet your income goals, and any potential gap between these figures. You can also view detailed year-by-year projections to better understand how your savings will grow over time.

The Power of Compound Interest

Compound interest is the process where the interest earned on an investment is added to the principal, so that future interest is calculated on both the original principal and the accumulated interest. This can significantly accelerate the growth of your retirement savings, especially over longer time periods.

Where:

• FV = Future value of the investment
• P = Principal (initial investment)
• r = Annual interest rate (as a decimal)
• n = Number of years
• PMT = Annual contribution

Determining Retirement Income Needs

While the commonly cited 4% rule provides a general guideline, determining your specific retirement income needs requires considering several factors:

• Your desired lifestyle in retirement
• Expected healthcare expenses
• Housing costs (including whether your mortgage will be paid off)
• Travel and leisure activities
• Legacy or inheritance plans

The Impact of Inflation

Inflation erodes purchasing power over time. For example, with a 2.5% annual inflation rate, $100,000 today would have the equivalent purchasing power of about $78,000 in 10 years, and just $61,000 in 20 years. This is why our calculator factors in inflation when projecting your retirement needs.

Traditional 401(k) and IRA

These tax-deferred accounts allow you to contribute pre-tax income, reducing your current taxable income. Your investments grow tax-free, but withdrawals in retirement are taxed as ordinary income. For 2025, the contribution limit for 401(k) plans is $22,500 ($30,000 if age 50 or older) and $6,500 for IRAs ($7,500 if age 50 or older).

Roth 401(k) and Roth IRA

These accounts are funded with after-tax dollars, so contributions don't reduce your current taxable income. However, qualified withdrawals in retirement are completely tax-free, including all investment gains. Roth IRAs also offer more flexibility, as the principal can be withdrawn at any time without penalties.

Health Savings Accounts (HSAs)

While primarily designed for healthcare expenses, HSAs can also serve as retirement accounts. They offer triple tax advantages: tax-deductible contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses. After age 65, you can withdraw funds for non-medical expenses, paying only ordinary income tax (similar to a traditional IRA).

While everyone's retirement needs are different, here are some general guidelines for retirement savings targets by age, expressed as multiples of your annual salary:

Source: These general guidelines are based on research from financial institutions like Fidelity Investments. Your personal situation and retirement goals may require different savings targets.