New Retirement Calculator
Plan for your future with our Retirement Calculator. Estimate how much you'll have saved by your desired retirement age and whether it will be enough to cover your expenses throughout retirement.
Understanding Your Retirement Plan
Retirement planning is a critical component of financial wellness, ensuring you have sufficient funds to maintain your desired lifestyle once you stop working. This calculator helps you visualize your financial future by estimating your savings at retirement and assessing if those savings will meet your income needs.
Key Factors in Retirement Planning:
- Current Age & Desired Retirement Age: These determine your accumulation period. The longer you save, the more time your money has to grow through compounding.
- Current Retirement Savings: Your starting point. Even a small amount can grow significantly over time.
- Annual Savings Contribution: How much you regularly add to your retirement accounts. Consistent contributions are vital.
- Expected Annual Return (Pre-Retirement): The average annual growth rate you expect on your investments before you retire. This is a crucial assumption, as higher returns accelerate wealth accumulation.
- Expected Annual Inflation Rate: The rate at which the cost of living increases. Inflation erodes purchasing power, meaning you'll need more money in the future to buy what costs less today. The calculator adjusts your desired retirement income for inflation.
- Desired Annual Retirement Income (Today's $): The amount of money you believe you'll need each year in retirement, expressed in today's dollars. The calculator will inflate this amount to your retirement year.
- Expected Annual Return (Post-Retirement): The average annual growth rate you expect on your investments during your retirement years, while you are withdrawing funds.
- Life Expectancy: How long you anticipate living in retirement. This helps determine the total duration your savings need to last.
How the Calculator Works:
The calculator performs several key steps to provide a comprehensive retirement outlook:
- Future Value of Current Savings: It projects how much your existing savings will grow by your retirement age, considering your expected pre-retirement investment return.
- Future Value of Annual Contributions: It calculates the total value of your ongoing annual contributions, compounded over your working years until retirement.
- Total Accumulated Savings: This is the sum of your future current savings and future contributions, representing your total nest egg at retirement.
- Inflation Adjustment: Your desired annual retirement income is adjusted for inflation to reflect its equivalent purchasing power in your retirement year. For example, if you want $60,000/year today and inflation is 3%, in 30 years you'll need significantly more than $60,000 to maintain the same lifestyle.
- Lump Sum Needed at Retirement: Based on your inflated desired income, post-retirement return, and life expectancy, the calculator determines the total lump sum you'll need at retirement to fund your desired lifestyle.
- Surplus/Deficit Analysis: It compares your projected accumulated savings with the lump sum needed, showing you if you're on track, have a surplus, or face a deficit.
- Funds Duration: If your savings are insufficient, it estimates how many years your funds will last. If your savings are ample, it might indicate they could last indefinitely or for a very long period.
Example Scenario:
Let's say you are 30 years old, want to retire at 65, and have $50,000 saved. You contribute $10,000 annually, expect a 7% pre-retirement return, and a 3% inflation rate. You desire $60,000/year in today's dollars during retirement, expect a 5% post-retirement return, and plan to live until 90.
- Years to Retirement: 35 years
- Years in Retirement: 25 years
- Projected Savings at Retirement: Approximately $1,800,000 – $2,000,000 (depending on exact compounding)
- Inflated Desired Annual Income: Your $60,000 today might be over $160,000 in 35 years due to inflation.
- Lump Sum Needed: To provide $160,000+ annually for 25 years with a 5% return, you might need around $2,300,000 – $2,500,000.
- Result: In this example, you might find you have a deficit, indicating you need to save more, increase your returns, or adjust your retirement expectations.
Use this calculator as a guide to make informed decisions about your retirement savings strategy. Remember, these are estimates, and actual results may vary based on market performance, inflation, and personal circumstances.
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function calculateRetirement() {
var currentAge = parseFloat(document.getElementById('currentAge').value);
var retirementAge = parseFloat(document.getElementById('retirementAge').value);
var currentSavings = parseFloat(document.getElementById('currentSavings').value);
var annualContribution = parseFloat(document.getElementById('annualContribution').value);
var preRetirementReturn = parseFloat(document.getElementById('preRetirementReturn').value) / 100;
var inflationRate = parseFloat(document.getElementById('inflationRate').value) / 100;
var desiredRetirementIncome = parseFloat(document.getElementById('desiredRetirementIncome').value);
var postRetirementReturn = parseFloat(document.getElementById('postRetirementReturn').value) / 100;
var lifeExpectancy = parseFloat(document.getElementById('lifeExpectancy').value);
var resultDiv = document.getElementById('result');
resultDiv.innerHTML = "; // Clear previous results
// Input validation
if (isNaN(currentAge) || isNaN(retirementAge) || isNaN(currentSavings) || isNaN(annualContribution) ||
isNaN(preRetirementReturn) || isNaN(inflationRate) || isNaN(desiredRetirementIncome) ||
isNaN(postRetirementReturn) || isNaN(lifeExpectancy)) {
resultDiv.innerHTML = 'Please enter valid numbers for all fields.';
return;
}
if (retirementAge <= currentAge) {
resultDiv.innerHTML = 'Desired Retirement Age must be greater than Current Age.';
return;
}
if (lifeExpectancy < retirementAge) {
resultDiv.innerHTML = 'Life Expectancy must be greater than or equal to Desired Retirement Age.';
return;
}
var yearsToRetirement = retirementAge – currentAge;
var yearsInRetirement = lifeExpectancy – retirementAge;
// 1. Calculate Future Value of Current Savings
var fvCurrentSavings = currentSavings * Math.pow((1 + preRetirementReturn), yearsToRetirement);
// 2. Calculate Future Value of Annual Contributions (Future Value of an Annuity)
var fvAnnualContributions;
if (preRetirementReturn === 0) {
fvAnnualContributions = annualContribution * yearsToRetirement;
} else {
fvAnnualContributions = annualContribution * ((Math.pow((1 + preRetirementReturn), yearsToRetirement) – 1) / preRetirementReturn);
}
// 3. Total Accumulated Savings at Retirement
var totalSavingsAtRetirement = fvCurrentSavings + fvAnnualContributions;
// 4. Adjust Desired Retirement Income for Inflation
var inflatedRetirementIncome = desiredRetirementIncome * Math.pow((1 + inflationRate), yearsToRetirement);
// 5. Calculate Lump Sum Needed at Retirement (Present Value of an Annuity in reverse)
var lumpSumNeeded;
if (postRetirementReturn === 0) {
lumpSumNeeded = inflatedRetirementIncome * yearsInRetirement;
} else {
lumpSumNeeded = inflatedRetirementIncome * ((1 – Math.pow((1 + postRetirementReturn), -yearsInRetirement)) / postRetirementReturn);
}
// 6. Compare Accumulated vs. Needed
var difference = totalSavingsAtRetirement – lumpSumNeeded;
// 7. Calculate How Long Funds Will Last
var yearsFundsLast = "Indefinitely";
if (totalSavingsAtRetirement = 1) { // If withdrawal is less than or equal to interest earned, funds last indefinitely
yearsFundsLast = "Indefinitely (or grow)";
} else {
yearsFundsLast = -Math.log(1 – term) / Math.log(1 + postRetirementReturn);
}
}
} else if (totalSavingsAtRetirement >= lumpSumNeeded) {
// If accumulated is more than needed, it will last at least the planned years, potentially indefinitely
if (inflatedRetirementIncome = 1) {
yearsFundsLast = "Indefinitely (or grow)";
} else {
yearsFundsLast = -Math.log(1 – term) / Math.log(1 + postRetirementReturn);
}
}
}
var formattedTotalSavings = totalSavingsAtRetirement.toLocaleString('en-US', { style: 'currency', currency: 'USD', maximumFractionDigits: 0 });
var formattedInflatedIncome = inflatedRetirementIncome.toLocaleString('en-US', { style: 'currency', currency: 'USD', maximumFractionDigits: 0 });
var formattedLumpSumNeeded = lumpSumNeeded.toLocaleString('en-US', { style: 'currency', currency: 'USD', maximumFractionDigits: 0 });
var formattedDifference = difference.toLocaleString('en-US', { style: 'currency', currency: 'USD', maximumFractionDigits: 0 });
var statusMessage = ";
if (difference >= 0) {
statusMessage = '
Congratulations! You are on track to meet or exceed your retirement goals.';
} else {
statusMessage = '
Warning: You may have a shortfall in your retirement savings. Consider increasing contributions or adjusting expectations.';
}
var yearsLastText = ";
if (typeof yearsFundsLast === 'number') {
yearsLastText = 'Your funds are projected to last for approximately
' + yearsFundsLast.toFixed(1) + ' years.';
} else {
yearsLastText = 'Your funds are projected to last
' + yearsFundsLast + '.';
}
resultDiv.innerHTML =
'
Retirement Plan Summary:
' +
'Years until retirement:
' + yearsToRetirement + '' +
'Years in retirement:
' + yearsInRetirement + '' +
'Projected total savings at retirement:
' + formattedTotalSavings + '' +
'Desired annual retirement income (adjusted for inflation):
' + formattedInflatedIncome + '' +
'Lump sum needed at retirement to cover desired income:
' + formattedLumpSumNeeded + '' +
'Difference (Savings – Needed):
' + formattedDifference + '' +
statusMessage +
" + yearsLastText + ";
}