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 roughly $860,000 — about $2,870 a month at a 4% withdrawal rate, or around $1,300 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.