Retirement Calculator

How this calculator works

Frequently asked questions

Why does the calculator work in today's money (real terms)?

Because retirement planning spans decades, and inflation makes nominal figures meaningless over that horizon. By using a real return, meaning the return after inflation, every output is expressed in today's purchasing power: a projected income of 2,000 per month means what 2,000 buys you now. This also avoids a common double-counting error where inflation is subtracted twice, once from the return and once from the income. Enter a real return (a diversified equity portfolio has historically delivered roughly 4 to 5% real over long periods) and today's prices for income and pension, and the arithmetic stays consistent.

What withdrawal rate should I use?

The withdrawal rate is the share of your portfolio you draw as income in the first year of retirement, with the plan of sustaining that spending. The famous 4% comes from William Bengen's 1994 study and the Trinity study, both based on historical US stock and bond returns over 30-year retirements. More recent research by Anarkulova, Cederburg, O'Doherty and Sias (2025), using a broad sample of developed markets rather than the unusually lucky US record, points to about 2.7% for a similar level of safety. The 3% default is a conservative middle ground. A lower rate means a safer plan but requires more wealth for the same income.

How is the projected wealth at retirement calculated?

With the standard future value formula: your current savings compound at the real return you set, and each monthly contribution is added at the end of the month and compounds from then on. The rate is an effective annual rate, converted to its exact monthly equivalent rather than divided by twelve. At a 0% real return the projection is simply savings plus all contributions. Because the return is real, the result is already in today's money.

Where do I find my expected pension figure?

From your own pension providers, because the calculator never estimates it. Most state pension systems offer an official projection of your future entitlement, and employer or private schemes send annual statements with a projected benefit. Add up the monthly amounts, prefer figures expressed in today's money (most official projections are), and enter the total. If you are unsure, run the calculator twice, once with the full projected pension and once with a lower figure, to see how much your plan depends on it.

How is the extra monthly saving figure computed?

The calculator first works out the portfolio you need at retirement: the annual income you want, minus your annual pension, divided by the withdrawal rate. For example, a 2,500 monthly target with a 1,000 pension at a 3% withdrawal rate needs 12 x (2,500 - 1,000) / 0.03 = 600,000. It then solves the future value formula for the monthly contribution that reaches exactly that amount from your current savings, and subtracts what you already contribute. If your pension alone covers the target, or your current plan already reaches the required wealth, the figure is zero and you are on track.

What does this calculator not include?

It is a deterministic projection: it assumes a smooth, constant real return, while real markets fluctuate, so it does not model sequence-of-returns risk or the probability of success that a Monte Carlo simulation would give. It also excludes taxes on withdrawals and pensions, investment fees, changes to contributions over time, and any country-specific pension rules, all of which vary widely. Treat the output as a planning scenario, use a return net of fees if you want to be conservative, and check tax treatment for your own country.