Retirement calculator

Traditional 401(k) and IRA contributions reduce your taxable income today. A $20,000 contribution at a 24% tax rate saves $4,800 in current taxes. The money then compounds untaxed for decades. You pay taxes on withdrawal, but presumably at a lower retirement tax rate.

IRS allows extra contributions: $7,500 more to 401(k)s (total $30,500 in 2024) and $1,000 more to IRAs (total $8,000). These extra $8,500/year, invested for 15 years at 7%, adds $227,000 to your retirement.

Average Social Security benefit in 2024 is $1,907/month ($22,884/year). Maximum is $4,873/month at 70. For most people, Social Security replaces 30-40% of pre-retirement income. The gap between Social Security and your spending needs must come from savings.

Average retired couple needs $315,000 (Fidelity 2023 estimate) for healthcare over retirement, not including long-term care. Medicare covers much but not all. Budget $500-$1,000/month for healthcare in retirement planning.

Multiply your annual spending by 25 (the inverse of the 4% rule). If you spend $60,000/year, you need $1,500,000. If you spend $40,000, you need $1,000,000. Add Social Security and pension income to reduce what must come from savings.

For stock-heavy portfolios (80% stocks, 20% bonds), use 7% real (after inflation) or 10% nominal. For balanced portfolios (60/40), use 5-6% real. For conservative portfolios, use 4-5% real. Lower rates are more conservative; higher rates may disappoint.

Contribute to your 401(k) at least up to the employer match first. Then consider a Roth IRA for tax diversification if you qualify. If you have more to save, max out the 401(k) ($23,000 in 2024). The order: match → Roth IRA → remaining 401(k) space.

Yes, but you need more saved and a longer withdrawal period. To retire at 55 instead of 65 with the same spending, you need roughly 35% more savings. The 4% rule was designed for 30-year retirements; 40-year retirements might need 3.5% withdrawals.

Start now. Even $200/month at 7% for 20 years is $104,000. Maximize any employer match immediately. Consider delaying retirement by 5 years, which adds saving years and reduces withdrawal years. Late is better than never.