The two halves of a retirement plan
Retirement math has two chapters. Accumulation: while you work, contributions plus compounding build the nest egg. Drawdown: after you stop, withdrawals plus (smaller) returns must stretch the money across decades you cannot fully predict. This calculator runs both chapters with your numbers: it grows your savings month by month until your retirement age, then simulates spending to find out how long the money could last.
What the projection assumes
Returns are modeled as smooth and constant. Real returns arrive in lumps — great years and bad years average out to something like your assumption, but the order matters near retirement. Treat the output as the center of a range, and revisit the plan every year or two as real balances replace projections.
The levers that matter, ranked
- Contribution amount and start age. Money contributed at 35 compounds for 30 years; money contributed at 55 compounds for 10. Early dollars are worth several late dollars.
- Retirement age. Working two more years adds contributions, adds compounding, and removes two years of spending — a triple effect, which is why it is the most powerful adjustment in the table.
- Spending in retirement. The drawdown simulation shows how sensitive longevity is to yearly spending; small reductions extend the money's life by years.
- Return. Matters, but less than the levers you control — and chasing return adds risk the smooth model cannot show.
What is not in this model
Social Security, pensions, taxes on withdrawals, inflation and healthcare shocks all move a real plan. A common adjustment: enter your expected return minus inflation (for example 7% − 3% = 4%) so the results are in "today's money," and count future Social Security as a reduction to the yearly spending you need from savings.
Worked example
A 35-year-old with $50,000 saved contributes $500 a month at a 7% return. At 65 they have about $1,015,810 — only $230,000 of it from contributions; compounding supplied the other ~$785,810. Spending $40,000 a year in retirement (at a 5% return), the balance still grows slowly in this smooth model, because first-year interest alone is about $50,790 — more than the spending. Raise spending to $60,000 a year and the money lasts roughly 37.6 years, to about age 102.
How to use this calculator
- Enter your current age and the age you hope to retire.
- Enter what you have already saved for retirement and what you add each month across all accounts.
- Set an expected return — long-run diversified portfolios have historically averaged 7–10% nominal before inflation.
- Enter the yearly spending you want in retirement and a (usually lower) return for those years.
- Use the “years the money lasts” figure as your compass: adjust contributions, retirement age or spending until it comfortably exceeds your life expectancy.
The 4% rule, briefly
A famous rule of thumb says a diversified portfolio can sustain withdrawals of about 4% of its starting value per year (adjusted for inflation) for roughly 30 years. On a $1,015,810 nest egg that is about $40,632 a year — close to the $40,000 drawdown in the example above, which is exactly the agreement you want to see: this smooth simulation is roughly as cautious as the rule built from real, bumpy market history. When the two disagree, trust the more cautious number.