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This free retirement savings calculator will help you calculate how much savings and income you will need to retire comfortably. Simply plug your information into the retirement calculator and find out if you’re on the right track!
Using this retirement calculator
When calculating your retirement balance, the calculator considers the compounded growth of your current savings as well as your future savings. For the purpose of this calculator, we assume that annual contributions are made into a savings account, which compounds annually.
Further, we assume that your annual savings contribution grows at 2% annually. Your current savings would be compounded annually for the remaining period until your age of retirement.
For example, imagine that your current savings account has $1,000 growing at a rate of 6% annually. In 2022, if you are 25 years old and are expected to retire at 65 years old, this implies that your savings would grow over a period of 40 years. At the end of the 40 years, the initial deposit of $1,000 would have grown up to $10,285.
Similarly, your annual future contributions too would grow over the remaining years until retirement. For example, if a contribution of $500 was made while you were 26 years old, it would grow for 39 years and would have grown to be $4,850 at retirement.
The contribution of $500 made the following year would grow for 38 years and would have grown to be $4,577 at retirement. Finally, the balance at retirement would be the total of all such contributions along with the growth of the initial deposit.
How Much Money Do I Need to Retire?
The amount of money required to retire is different for everyone because it depends on several factors that are unique to you. To adequately plan for your retirement, you will need to consider more besides just your basic income and expenses.
For example, don’t forget to include all your income sources: your regular income, social security income, and any other income streams you may have. You should also be sure to include expenses that are often forgotten, such as medical expenses and travel expenses.
In addition to income and expenses, here are some other things to consider:
- Your spending habits
- The cost of living where you are located
These factors continuously change, which means your retirement plan will, too.
Check in with our retirement age calculator as your situation fluctuates to ensure you are on the right track.
Be more confident in planning for your retirement by understanding these common retirement terms.
Retirement age: The age you retire is primarily dependent on you. You are fully eligible for Social Security benefits beginning at age 66 (or 67 if you were born in 1960 or later), but you can retire early if you desire. If you do choose to retire early, you are eligible for Social Security benefits starting at age 62 with a lower monthly amount. The age you plan to retire is important to your retirement investment plan, so be sure to include it in the retirement age calculator.
Retirement savings: Also referred to as your nest egg and includes any savings you have set aside for retirement, whether they be in a 401(k), an IRA, or something else. Make sure to include the amount of any current savings you have in the retirement savings calculator for an accurate calculation.
Pre-tax income: The amount of money you earn from working or investing before taxes are deducted. This is also called your gross income.
Monthly spending: Your monthly expenses, including housing, transportation, food, childcare, medical care, taxes, and other necessities.
Investment rate of return: Refers to the change in the investment amount from the beginning to the end of a time period, expressed as a percentage. Put another way, it is the net gain or loss of the investment over a specific period.
Life expectancy: The average lifespan of a human, or the expected age that you will live to. The current average life expectancy for Americans is around 79 years.
Inflation: Refers to an increase in the price of goods and services as time passes. Inflation causes the value of money to decrease because your ability to purchase goods and services is lessened as the price of those goods and services goes up.
Growth rate: The rate of change over a period of time, expressed as a percentage.
Pre-retirement income: The income you are receiving from work or investments before retirement.
Compound interest: Includes the interest you earn on your original deposit and on the interest the original deposit has already earned.
401(k): A retirement savings plan often offered by employers. Your contributions to the retirement savings plan are automatically withdrawn from your paychecks. One of the benefits of a 401(k) is that it provides you (the employee) with a tax break on any money you contribute to the 401(k). Some employers will even match your contribution, though this depends on your employer.
IRA: Stands for Individual Retirement Account. These types of investment accounts are used for retirement savings, similar to the 401(k), but are unrelated to your employer.
Contribution limits: The IRS has rules limiting yearly contributions to a 401(k) or an IRA.
Financial advisor: Offers help with money management, advising individuals on things like when to make investments, what to invest in, saving for retirement, planning for large expenditures, managing spending, and more.
How can I save more money for retirement?
You can contribute a larger percentage of your income to a 401(k) or IRA.
What is the average 401(k) balance for a 65-year-old?
In the current market, the average balance of a 401(k) in a 60-something-year-old individual is somewhere around $182,100.
How is our retirement calculator different than Dave Ramsey, Fidelity, or NerdWallet’s?
Other retirement savings calculators will often ask you for information you can’t possibly know (e.g., the expected rate of return on your investments) or fail to include relevant information (such as your current age).
Our free retirement savings calculator considers all the important factors and will give you an accurate picture of the work you need to do before retirement.
Use our free retirement savings calculator to fine-tune your retirement investment plan today.