Retirement calculator

How much do I need to retire?

Start from the income, not the pot. Decide the yearly income you want from savings in today's money, take off any pension or Social Security you expect, and divide by the share of the pot you plan to draw each year, the withdrawal rate. Pot needed = (income wanted - other income) / withdrawal rate.

At $30,000 a year and a 4% withdrawal rate, that is $30,000 / 0.04 = $750,000 in today's money. At 3% it is $1,000,000, and at 5% it is $600,000. The withdrawal rate is your assumption. The calculator opens at 4% only so that every field starts with a value; that is a starting figure, not a rule and not advice, and any rate from 1% to 10% can be entered. The safe withdrawal rate calculator shows how long a pot lasts at different rates.

How does this retirement calculator work?

1. Grow your savings to retirement. Your current savings grow at the yearly rate you enter, and each month's saving is added at the end of the month and grows at the matching monthly rate, (1 + g)^(1/12) - 1. If you raise your saving each year, the new amount applies from the first month of each year: in year y it is the first monthly amount x (1 + raise)^(y - 1).
2. Restate the pot in today's money. Divide by (1 + inflation)^years. On the default inputs $1,261,688 at 65 is worth $601,500 at today's prices after 30 years of 2.5% inflation.
3. Work out the pot the income needs. Income from savings divided by your withdrawal rate: $750,000 in today's money, or $1,573,176 in money of the retirement year.
4. Compare. $601,500 - $750,000 = a shortfall of $148,500 in today's money.
5. Find the fix. The shortfall in money of the day, $311,488, spread over 360 months of saving at the same growth rate, is an extra $319.63 a month.

Why does the calculator show two pots?

A projection in money of the day looks large because it includes 30 years of inflation. $1.26 million sounds like plenty, but at 2.5% a year prices will be 2.10 times what they are now, so it buys what $601,500 buys today. The calculator shows both so the big number does not mislead.

The comparison itself is made like for like. The income you type is in today's money, the target pot is worked out in today's money, and the projected pot is converted back to today's money before the two are compared. The chart under the calculator draws the projected pot both ways against the target line.

What if I retire earlier or later?

The retirement age works on three things at once: more years of saving, more years of growth, and fewer years for inflation to erode the result in today's money. On the default inputs:

The target stays at $750,000 because the income is set in today's money. In practice a later retirement also means fewer years to fund, which this page does not count; the retirement drawdown calculator shows how long a pot lasts once withdrawals begin.

How does each input change the result?

• Growth rate. At 4% the default plan is short by $345,989; at 5% by $258,253; at 7% by $11,018; at 8% it is ahead by $161,381.
• Inflation. At 2% the shortfall is $53,459; at 3% it is $230,201. Higher inflation shrinks the pot in today's money.
• Withdrawal rate. At 3.5% the target rises to $857,143 and the shortfall to $255,643; at 5% the target falls to $600,000 and the plan is ahead by $1,500.
• Rising saving. Raising the $1,000 a month by 3% each year turns the shortfall into a surplus of $36,511.
• Other income. Expecting $10,000 a year from a pension cuts the target to $500,000 and leaves a surplus of $101,500.

Worked examples in pounds and dirhams

Pounds. Age 30, retiring at 67, £20,000 saved and £400 a month at an assumed 5% growth and 2% inflation. The aim is £30,000 a year in today's money, with £11,000 expected from other pensions. The pot reaches £620,524 at 67, or £298,231 in today's money, against a target of £19,000 / 4% = £475,000. The shortfall is £176,769, and an extra £294.89 a month would close it.

UAE dirhams. Age 40, retiring at 60, AED 200,000 saved and AED 10,000 a month at an assumed 7% growth and 2% inflation, aiming for AED 240,000 a year. The pot reaches AED 5,849,301, or AED 3,936,412 in today's money, against a target of AED 6,000,000 at 4%. The shortfall is AED 2,063,588, and closing it takes about AED 6,042 more a month.

How do you do a retirement projection in Excel?

Two functions cover it. For the projected pot, use FV with the monthly rate: =FV((1+6%)^(1/12)-1, 360, -1000, -50000) returns 1,261,687.53. Money paid in is entered as negative, so the result comes back positive. Divide by (1+2.5%)^30 for today's money.

For the extra saving, use PMT with the shortfall in money of the day as the future value: =PMT((1+6%)^(1/12)-1, 360, 0, 311488.15) returns -319.63, the minus sign showing money you pay in. If you raise your saving each year, build a yearly table instead, as the schedule under the calculator does.

Retirement accounts and pensions where you live

This page treats your savings as one pot. In practice they sit in accounts whose tax treatment and limits depend on the country. Each of these has its own calculator in this series: the 401(k) and Roth IRA in the US, the RRSP and TFSA in Canada, and the stocks and shares ISA, Lifetime ISA and pension tax relief pages in the UK.

State pensions belong in the other income field. In the UK, the Check your State Pension forecast service on GOV.UK shows how much State Pension you could get, when you can get it and whether you can increase it. Enter that amount in today's money, and do the same with any Social Security or workplace pension estimate you hold.

Common mistakes, and what this calculator leaves out

• Comparing a future pot with today's prices. Always compare in the same money; this page does it for you.
• Using one growth rate as a promise. Real returns vary, can be negative for years, and fees and tax reduce them.
• Forgetting that the withdrawal rate is a choice. It sets the target; a lower rate means a bigger pot is needed.
• Ignoring other income. A pension that starts at a later age still reduces what the pot must provide.

The calculator does not model tax relief, employer contributions, account limits, fees, lump sums, changes in spending during retirement or how long you live. It is a projection on the assumptions you enter, not advice or a forecast.

Glossary

Pot: the total saved for retirement. Withdrawal rate: the part of the pot, in percent, you plan to take out in your first retirement year. Today's money: a future amount divided by the inflation between now and then. Money of the day (nominal): the amount as it will be counted when you reach it. Shortfall: how far the projected pot falls below the pot the income needs. Growth rate: the yearly rate you assume the pot grows at, before inflation.

Frequently asked questions

Courses related to long-term saving

Sources and review