Retirement Calculator
Find out how much to invest each month to retire with the income you want. The calculator uses a real rate of return, so the result is already in today’s money. It is free and shows both the accumulation phase and the capital you need for the income.
Accumulation until retirement
Year-by-year projection
| Year | Interest this year | Total invested | Total interest | Wealth |
|---|
How the Retirement Calculator works
The calculation has two phases. First, the calculator finds the capital you need at retirement to sustain the income you want. Then it works out the monthly contribution that gets you to that capital, starting from what you already have invested and using compound interest during the accumulation phase.
To live off income (perpetual), the capital is C = income / i, where i is the real monthly rate. For a fixed term, it uses C = income · [1 − (1+i)⁻ᵐ] / i, with m being the months of withdrawal. The contribution comes from PMT = (C − PV·(1+i)ⁿ) · i / ((1+i)ⁿ − 1).
What you need to enter
- Current age and the age you want to retire.
- How much you already have invested today. It can be zero.
- Desired monthly income in retirement, in today’s money.
- Income model: living off income (perpetual) or a fixed term.
- Estimated real return, already net of inflation.
Why we use a real rate of return
The calculator works with the real rate, that is, the return above inflation. This keeps everything in today’s purchasing power: the income and capital shown match what that money would buy now. So you do not have to guess future inflation or adjust the figures later.
As a reference, many planners use somewhere between 3% and 5% per year in real return for long-term portfolios. The calculator defaults to 4%, but adjust it to your scenario and risk profile.
The cost of waiting: contribution by starting age
Here is how much you would need to invest per month to have $5,000 of income when retiring at 60, in the live-off-income model, with 4% real return and starting from zero. The only difference between the rows is the age you start:
| Starting age | Years of accumulation | Monthly contribution needed |
|---|---|---|
| 25 | 35 years | ~$1,700 / mo |
| 30 | 30 years | ~$2,229 / mo |
| 35 | 25 years | ~$3,000 / mo |
| 40 | 20 years | ~$4,200 / mo |
Waiting from 25 to 40 more than doubles the monthly contribution for the same income. That is the effect of losing years of compound interest: time is the cheapest ingredient of all.
How much you need to live off income
In the perpetual model, the capital you need depends only on the desired income and the real rate. At 4% per year, here is the approximate capital for different monthly incomes:
| Desired monthly income | Capital to live off income |
|---|---|
| $3,000 | ~$916,000 |
| $5,000 | ~$1,527,000 |
| $8,000 | ~$2,443,000 |
| $10,000 | ~$3,054,000 |
If you accept drawing down the capital over a term (for example, 25 years), the amount needed drops a lot: for $5,000 a month, it goes from ~$1.5 million to around $950,000. The choice depends on how long you want the income to last.
How to reach retirement with peace of mind
The most valuable step is to start early: as the table shows, each decade of delay makes the contribution much more expensive. Then, automate the contributions so they happen every month without relying on willpower, and increase them as your income grows.
Keep a separate emergency fund, so you do not have to cash out long-term investments for the unexpected. And review the plan periodically: changes in income, goals and scenario call for adjustments to the contribution and the income target.
Important considerations
The simulation is a projection, not a guarantee. The real return varies over time, and the calculator assumes a constant rate. Use a conservative estimate so you do not overstate the result.
The perpetual model assumes you live only off the real returns, preserving the capital’s purchasing power. The fixed-term model draws down the wealth until it hits zero at the end of the period: if you live longer than planned, the income runs out. Also factor in health costs and lifestyle changes when setting the desired income.
Frequently asked questions
It depends on the monthly income you want and the estimated real return. To live off income (without drawing down the capital) with $5,000 per month at a 4% real rate, you need about $1.5 million. If you accept drawing down the wealth over a term, like 25 years, the figure drops to around $950,000. Use the calculator above for your goal.
Starting from zero, with a 4% real rate and a live-off-income goal, it is about $2,229 per month over 30 years (from 30 to 60). The earlier you start, the smaller the contribution: starting at 25 it drops to around $1,700; waiting until 40 it climbs to more than $4,000 per month. Time is the factor that weighs the most.
Living off income means accumulating capital large enough that the returns alone cover your expenses, without having to draw down the principal. In theory, the wealth lasts indefinitely. It is the most conservative option and requires more capital than plans that draw down the money over a fixed term.
Yes, in a simplified way, by using the real return, that is, net of inflation. By working with the real rate, all figures stay in today’s purchasing power: the income and capital the calculator shows match what that money would buy now, which makes the result easier to interpret.
With perpetual income, you live only off the returns and the capital stays intact, which requires a larger amount. With fixed-term income, you gradually draw down your own capital over a set period (for example, 25 years), which greatly reduces the amount needed, but the money runs out at the end of the term.
It makes a huge difference, because of compound interest. For the same income goal, someone starting at 25 may need to invest less than half per month compared with someone starting at 40. Each year of delay makes the monthly contribution more expensive, because the money has less time to grow. That is why starting early, even with little, is usually the most important decision.
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