Retirement Savings Goal Calculator
Estimate your retirement savings goal and how much you need to save each month to reach it.
Formulas Used
1. Nest Egg Needed (Present Value of Retirement Annuity — in today's dollars):
Nest Egg = Annual Gap × [1 − (1 + r_real_dist)^(−n_ret)] / r_real_dist
Where Annual Gap = (Monthly Expenses − Social Security) × 12, r_real_dist = real return during retirement, n_ret = years in retirement.
2. Future Value of Current Savings (inflation-adjusted):
FV = Current Savings × (1 + r_real_accum)^(years to retirement)
3. Real (Inflation-Adjusted) Rate — Fisher Equation:
r_real = (1 + r_nominal) / (1 + r_inflation) − 1
4. Required Monthly Contribution (Future Value of Annuity):
PMT = Additional Needed × r_m / [(1 + r_m)^(N) − 1]
Where r_m = real monthly rate = (1 + r_real_accum)^(1/12) − 1, N = total months to retirement.
All figures are expressed in today's dollars (inflation-adjusted) for easier planning.
Assumptions & References
- All calculations use real (inflation-adjusted) rates via the Fisher equation, so results are expressed in today's purchasing power.
- The nest egg calculation uses a present-value annuity formula, assuming annual withdrawals at the start of each retirement year.
- Social Security / pension income is assumed to be inflation-indexed and reduces the required monthly withdrawal gap.
- Returns are assumed to be consistent and compounded annually (monthly for contributions).
- Taxes on withdrawals are not included; consult a tax advisor for Roth vs. Traditional IRA/401(k) implications.
- Historical U.S. stock market real returns average ~5–7% annually (Damodaran, NYU Stern).
- The 4% rule (Bengen, 1994) suggests a 4% annual withdrawal rate is generally sustainable over 30 years.
- Social Security Administration: ssa.gov
- IRS contribution limits: irs.gov/retirement-plans