How the target is calculated
The nest egg you need is your desired annual income divided by a safe withdrawal rate — the inverse of the well-known “4% rule,” which implies a target of about 25× your yearly spending. Because prices rise, the tool inflates that target to the dollars you’ll actually face in your retirement year, then compares it with where your current savings and contributions are heading.
target (today) = desired income ÷ withdrawal rate
target (at retirement) = target (today) × (1 + inflation)^years
gap = target − projected savings
Frequently asked questions
- How much do I need to retire?
- A common rule: divide your desired annual retirement income by a safe withdrawal rate (often 4%), giving a target of roughly 25 times your annual spending. This tool inflates that target to your retirement year and compares it with your current savings trajectory.
- What is a safe withdrawal rate?
- It is the share of your nest egg you withdraw in the first year and then adjust for inflation, historically with a low risk of running out. Around 4% is widely cited, though it is debated and depends on your time horizon and markets.
- What should I do about a shortfall?
- The calculator estimates the extra monthly contribution needed to close the gap. Closing a gap discovered late with contributions alone gets expensive, so protecting the trajectory from large losses matters as much as saving more.
This calculator is for educational purposes only and does not constitute financial, tax, or investment advice. It assumes a constant return and inflation rate and a simple withdrawal-rate rule; it does not model taxes, Social Security, or market volatility. Estimates, not guarantees.