US Retirement calculator

How retirement projections are calculated

We project your nest egg by compounding your current balance plus regular contributions at the expected return rate until your target retirement age, then estimate sustainable annual withdrawals using your chosen safe withdrawal rate (4% by default).

Nest egg = current savings × (1+r)n + annual contribution × ((1+r)n − 1) / r
Sustainable income = nest egg × withdrawal rate

Worked example

Age 35, retiring at 65 (30 years to go). Current savings $50,000, $1,500/month contribution, 7% nominal return, 4% withdrawal rate.

• Future value of $50,000 at 7% for 30 years: $380,613
• Future value of $1,500/month at 7% for 30 years: $1,829,940
• Total projected nest egg: ~$2,210,553
• Sustainable annual income: 4% × $2.21M = $88,422/year (~$7,400/month)

That's roughly the equivalent of $36,000/year in today's purchasing power at 3% inflation — useful, but smaller than the headline number suggests.

The 4% rule (Trinity Study)

The Trinity Study (Cooley, Hubbard, Walz, 1998) found that a retiree withdrawing 4% of an initial balance and adjusting that dollar amount for inflation each year had a very high probability of not running out of money over a 30-year retirement, given a balanced (60/40) stock-bond portfolio. Updates have refined this:

• 4% — original baseline, 30-year horizon
• 3.5% — safer for 40+ year horizons (early retirement)
• 3.3% — current Morningstar conservative recommendation given high stock valuations
• 3.0% — very early retirement, very long horizon

What rate of return should I assume?

Historical real (after-inflation) returns: US large-cap stocks ~7%, global stocks ~5.5%, 60/40 stock/bond portfolio ~5%. For projections, most planners use 4–6% real or 6–8% nominal — and many recommend running a pessimistic case (4–5% nominal) to stress-test the plan.

Common mistakes

• Confusing nominal and real dollar amounts. A $2.2M projection isn't $2.2M of today's purchasing power.
• Assuming smooth annual returns. Markets give −30% and +40% years; the average matters over decades, but volatility matters for someone within 5 years of retirement.
• Lifestyle inflation. Saving rate matters more than rate of return. Going from 10% to 20% savings rate roughly halves time to retirement.
• Forgetting healthcare costs in early retirement. Pre-Medicare-age US retirees often pay $1,000–$2,000/month for private insurance.
• Underestimating retirement expenses. Many retirees spend close to their pre-retirement income for the first 5–10 years.

What this calculator doesn't cover

• Sequence-of-returns risk (variance in early-retirement returns)
• Variable returns and inflation modelling
• Social Security / state pension / CPP / Australian Age Pension benefits
• Tax on withdrawals (taxable vs tax-deferred vs tax-free account splits)
• Healthcare and long-term care costs
• Bequest goals (leaving an estate)

For more rigorous modelling, use a Monte Carlo simulator (FIRECalc, cFIREsim) once your basic plan is in place.