How much you need to retire
Two framings are useful. The replacement-rate approach assumes you need 70% to 85% of pre-retirement income, since work-related costs and retirement contributions end while healthcare costs typically rise. The multiple-of-salary approach targets roughly 10 to 12 times your final salary in invested assets.
Both are starting points rather than answers. Your actual number depends on whether you will have a paid-off home, what healthcare will cost before Medicare eligibility, whether you have pension or Social Security income, and how you intend to spend your time. Early retirees need substantially more because they face a longer horizon and no Medicare access. The calculator turns your own target — income wanted, less other income — into a required balance and the monthly saving that reaches it.
| Annual income | At 4% | At 3.5% | At 3% |
|---|---|---|---|
| $30,000 | $750,000 | $857,143 | $1,000,000 |
| $40,000 | $1,000,000 | $1,142,857 | $1,333,333 |
| $50,000 | $1,250,000 | $1,428,571 | $1,666,667 |
| $60,000 | $1,500,000 | $1,714,286 | $2,000,000 |
| $80,000 | $2,000,000 | $2,285,714 | $2,666,667 |
| $100,000 | $2,500,000 | $2,857,143 | $3,333,333 |
Why starting early matters more than saving more
Compounding rewards time far more than amount. The same $500 a month produces wildly different balances depending on when it starts, because the early contributions have decades to grow. Someone who starts at 25 and stops at 35 can end up with more at 65 than someone who starts at 35 and never stops.
| Saving from | Years of saving | Total contributed | Balance at 65 |
|---|---|---|---|
| Age 25 to 65 | 40 years | $240,000 | $1,312,407 |
| Age 30 to 65 | 35 years | $210,000 | $900,527 |
| Age 35 to 65 | 30 years | $180,000 | $609,985 |
| Age 40 to 65 | 25 years | $150,000 | $405,036 |
| Age 45 to 65 | 20 years | $120,000 | $260,463 |
| Age 50 to 65 | 15 years | $90,000 | $158,481 |
The 4% rule and its limits
The 4% rule holds that withdrawing 4% of your portfolio in the first year of retirement, then adjusting for inflation annually, has historically survived 30 years across US market history. A $1,000,000 portfolio supports about $40,000 in first-year withdrawals.
The rule comes with real caveats. It was derived from historical US data with a stock-heavy portfolio and a 30-year horizon. Retirements longer than 30 years, international portfolios, high fees, or a poor sequence of early returns can all break it. Many planners now suggest 3.3% to 3.7% as a more durable starting figure, or a flexible strategy that spends less after bad market years. The calculator also shows a spend-down figure — the income that exhausts the portfolio exactly at your planning age — as a ceiling.
| Initial withdrawal rate | First-year income | Portfolio lasts |
|---|---|---|
| 3% | $30,000 | 60+ years |
| 3.5% | $35,000 | 48 years |
| 4% | $40,000 | 38 years |
| 4.5% | $45,000 | 32 years |
| 5% | $50,000 | 27 years |
| 6% | $60,000 | 21 years |
Where inflation fits
A projection in future dollars overstates what you can buy. At 2.5% inflation, prices roughly double every 28 years, so $2,000,000 in 30 years buys about what $950,000 buys today. The calculator shows both figures for exactly this reason: plan against the inflation-adjusted number.
This is also the case for holding growth assets in retirement rather than moving entirely to cash. A portfolio earning less than inflation loses purchasing power every year, which over a multi-decade retirement is its own form of risk.
| In | At 2.5% inflation | At 3% inflation |
|---|---|---|
| 10 years | $76,805 | $80,635 |
| 20 years | $98,317 | $108,367 |
| 30 years | $125,854 | $145,636 |
| 40 years | $161,104 | $195,722 |
Account types and the order to fund them
Tax treatment materially changes outcomes. Traditional 401(k) and IRA contributions reduce taxable income now and are taxed on withdrawal. Roth contributions are made with after-tax money and grow tax-free, which favors savers who expect higher tax rates later. Health savings accounts are uniquely favorable when used for medical costs: deductible going in, tax-free growth, and tax-free qualified withdrawals.
A widely used funding order is: contribute enough to capture the full employer match, pay off high-interest debt, fund an HSA if eligible, max an IRA, then return to the 401(k). The employer match comes first because it is an immediate return no market can reliably beat.
| Account | Contributions | Growth | Withdrawals | Best for |
|---|---|---|---|---|
| Traditional 401(k) / 403(b) | Pre-tax, via payroll; employer match common | Tax-deferred | Taxed as income; required minimums later | Capturing a match; high earners now |
| Roth 401(k) | After-tax, via payroll | Tax-free | Tax-free if qualified | Those expecting higher taxes later |
| Traditional IRA | Pre-tax if eligible | Tax-deferred | Taxed as income | Extra tax-deferred space |
| Roth IRA | After-tax; income limits | Tax-free | Tax-free if qualified; no required minimums | Younger and lower-bracket savers; flexibility |
| HSA | Pre-tax; needs a high-deductible health plan | Tax-free | Tax-free for medical costs | Anyone eligible — the most tax-favoured account |
| Taxable brokerage | After-tax, no limits | Taxed on dividends and realised gains | No restrictions | Beyond the limits of the above; early retirement |