Required Retirement Savings Calculator
The Required Retirement Savings Calculator estimates the nest egg needed to generate a target annual retirement income at a chosen sustainable withdrawal rate, using the inverse of the 4% rule.
What this means
If you need $40,000 a year and plan a 4% withdrawal rate, you need $40,000 ÷ 4% = $1,000,000 saved. This reverse calculation gives you a concrete savings target.
How we calculate it
Formula
Required balance = annual income ÷ withdrawal rate.Worked example
Wanting $60,000/year at a 4% withdrawal rate:
- 1Balance = 60,000 ÷ 0.04 = $1,500,000
Important assumptions
- The withdrawal rate is sustainable over your retirement.
- Income is before taxes.
Frequently asked questions
How do I fill the gap between savings and the target?
Increase contributions, extend the work horizon, or add income streams like Social Security or a pension. The years-to-retirement calculator helps model the saving timeline.
Should the number be inflation-adjusted?
Yes — your future income need will be higher in nominal dollars. Apply an inflation factor to the target income for a realistic number.