Retirement Planner
You might also like...
Planning for retirement involves figuring out how much money you'll need to live on and creating a strategy to get there. This calculator helps you see if your current savings plan is on track.
The Nest Egg
Your "nest egg" is the total amount of money you'll have saved by the time you retire. It grows through your contributions and the returns you earn on your investments over time.
Sustainable Income
Once you retire, you'll start drawing down on your nest egg. This calculator estimates the annual income you can sustainably withdraw throughout your retirement without running out of money, based on your life expectancy and expected investment returns.
Are You On Track?
By comparing your desired annual income to the sustainable income your savings can generate, you can quickly see if there's a shortfall. If there is, consider increasing your monthly contributions, adjusting your investment strategy, or rethinking your retirement age.
Logic & Formulas
The calculation is a two-part process:
- Calculate Projected Nest Egg: This uses the same logic as the Investment Calculator to find the future value of your current savings and future contributions at your retirement age.
- Calculate Sustainable Income: This step treats your nest egg as the principal of a loan. It calculates the fixed annual "payment" (your income) you can receive for a number of years (Life Expectancy - Retirement Age) at the post-retirement return rate. It uses the same amortization formula as the Loan Calculator, but solved for the payment (M).
The final step is to compare this sustainable income with your desired income to determine if there is a surplus or a shortfall.