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How the Retirement Calculator Works

We believe you should be able to see how a calculator reaches its answer. This page explains the method in plain language, along with what it does not include.

Step 1: Growing your savings until retirement

Each month, your balance grows by the monthly equivalent of your expected annual return, and then your monthly contribution is added. If you enter a yearly contribution increase, your contribution rises by that percentage each year.

Step 2: Converting to today's dollars

We divide your future balance by the cumulative effect of inflation so the result is expressed in the buying power of today's dollars. This makes it easy to compare with your current spending.

Step 3: Estimating the savings you need

We take your desired monthly income, subtract any Social Security or pension amount you entered, and calculate the lump sum that could fund that monthly gap from your retirement age until your plan-to age. The calculation uses the real return, meaning your return after inflation, and assumes withdrawals rise with inflation.

Step 4: Checking whether you are on track

If your projected balance at retirement (in today's dollars) is at least the amount needed, we show that you are on track. Otherwise we show the shortfall and the age at which your money could run out.

Step 5: Chance of success (simulated markets)

A steady return is easy to understand but unrealistic, because real markets rise and fall. To show how sturdy your plan is, we also run 2,000 simulated markets. In each one, the yearly return is drawn at random around your expected return, with a typical size of ups and downs that you can change under Advanced options (12% by default). We count the share of simulations in which your savings last until your plan-to age. The result is the "chance your money lasts".

The simulations use a fixed random seed, so the same inputs always give the same answer. If you set the market ups and downs to 0, every simulated market behaves like your steady estimate. The figure is an estimate that depends on the assumptions; it is not a prediction or a guarantee.

Step 6: Scenarios and comparisons

• Return scenarios: We repeat the calculation with returns 2 percentage points lower (cautious) and 2 points higher (optimistic) than your estimate.
• Retirement age table: We repeat the calculation for retirement ages of 60, 62, 65, 67 and 70 (and your chosen age). If you chose a Social Security start age, benefits begin at that age or at retirement, whichever is later.
• Suggestions: The extra monthly saving and extra working years shown are calculated by re-running the model until the gap closes.

Advanced options

• Social Security start age (62 to 70): Enter your expected monthly benefit at age 67 (full retirement age for people born in 1960 or later) in step 3. We adjust it for the age you choose: about 30% lower if it starts at 62 and about 8% higher for each year you wait after 67, up to 24% higher at 70. If benefits start after you retire, your savings cover the full income until then. These are general rules; your own estimate at ssa.gov is the best source.
• Return after retirement: Many people invest more conservatively once they retire. If you enter a separate return, it is used from your retirement age. If you leave it blank, the same return is used throughout.
• Investment fees: The yearly fee you enter is subtracted from your return before and after retirement.
• Market ups and downs: Used only for the chance of success. Typical values are around 8% for conservative portfolios and 16% for stock-heavy ones.

What the calculator does not include

• Income taxes, capital gains taxes and required minimum distributions
• Healthcare and long-term care costs, unless you include them in your desired income
• Spouse or partner planning, one-time expenses and inheritances
• Spousal and survivor Social Security benefits, and the earnings limit if you claim early and keep working
• Changes in how much you spend as you age

Learn more in our guide to retirement calculator assumptions, or go to the calculator.