Retirement calculator
A projection, not a plan. It assumes a steady return, steady contributions and steady inflation, and none of the three behaves that way. State pensions, tax relief and employer contributions are not included.
A retirement projection compounds what you have saved plus what you add, then applies a withdrawal rate to the result. Saving $500 a month from 35 to 67 on top of $50,000, at a 6% return, reaches about $918,000 — roughly $3,061 a month at a 4% withdrawal rate, or around $1,389 in today’s money after 2.5% inflation.
How to use this calculator
The two income figures are the important pair. The nominal monthly income looks generous and is quoted in the money of decades hence; the today’s-money figure is the same income measured against present prices, and it is usually less than half as large. Plan against the second one.
Questions
From a 1994 study by William Bengen of historical US portfolios, which found that a 4% initial withdrawal, adjusted for inflation, survived every thirty-year window tested. It is a rule of thumb, not a guarantee, and it was never meant for retirements longer than thirty years.
Enter the nominal return and let the inflation field do the deflating. Entering a real return and an inflation figure would deflate it twice.
Add them to the monthly figure. If your employer matches five per cent of salary, that money compounds exactly like your own.
No. Whether the pot is taxed on the way in, on the way out, or not at all depends on the account type and the country, and it changes the answer substantially.