Accumulation Phase
Your projected balance at retirement is calculated by compounding your current savings monthly at the expected annual return, adding your contribution each month. If you set an annual contribution increase, your contribution grows by that percentage each year. Your employer match is added on top — a 3% match on a $1,000 contribution adds $30/month to the projection.
Retirement Spending Phase
At retirement, the calculator switches to a drawdown model. Each month, your portfolio continues to earn the expected return while withdrawals are subtracted. Social Security and any other income you specify reduce the amount pulled from the portfolio each month. Your spending goal also increases each year by the inflation rate you set — so a $5,000/month goal at 2.5% inflation becomes ~$6,400/month by year 10. The "Funds Depleted" age is when the portfolio balance reaches zero.
Traditional vs. Roth
If you select Traditional, the calculator grosses up your withdrawals using your estimated tax rate — so if you want to spend $5,000/month and your rate is 18%, you need to withdraw ~$6,100 to net that amount after tax. You can adjust the tax rate slider to match your expected situation. If you select Roth, withdrawals are treated as tax-free and no gross-up is applied.
A Note on Return Assumptions
A 6–7% annual return is a common planning assumption for a diversified stock/bond portfolio. Historical U.S. stock market returns have averaged roughly 10% annually before inflation. More conservative allocations typically use 4–6%. No projection can guarantee future returns.
What This Calculator Does Not Model
· Taxes on investment gains during accumulation
· Required Minimum Distributions (RMDs) at age 73
· Social Security cost-of-living adjustments (COLAs)
· Investment fees or fund expense ratios
· Sequence-of-returns risk
· Healthcare costs or long-term care expenses
· Inflation impact on the accumulation phase