Ramsey Retirement Calculator

Ramsey Retirement Nest Egg Calculator

Your Retirement Projections

Years Until Retirement: years

Recommended Annual Investment (15% of Gross Income):

Projected Retirement Nest Egg:

Estimated Annual Income from Projected Nest Egg (4% Withdrawal):

Desired Annual Retirement Income (Inflated to Retirement Age):

Required Nest Egg for Desired Income:

Retirement Nest Egg Gap/Surplus:

function calculateRamseyRetirement() { var currentAge = parseFloat(document.getElementById("currentAge").value); var retirementAge = parseFloat(document.getElementById("retirementAge").value); var currentSavings = parseFloat(document.getElementById("currentSavings").value); var annualIncome = parseFloat(document.getElementById("annualIncome").value); var desiredRetirementIncome = parseFloat(document.getElementById("desiredRetirementIncome").value); var growthRate = parseFloat(document.getElementById("growthRate").value) / 100; var inflationRate = parseFloat(document.getElementById("inflationRate").value) / 100; // Input validation if (isNaN(currentAge) || isNaN(retirementAge) || isNaN(currentSavings) || isNaN(annualIncome) || isNaN(desiredRetirementIncome) || isNaN(growthRate) || isNaN(inflationRate) || currentAge <= 0 || retirementAge <= 0 || currentSavings < 0 || annualIncome <= 0 || desiredRetirementIncome <= 0 || growthRate <= 0 || inflationRate < 0) { alert("Please enter valid positive numbers for all fields."); return; } if (retirementAge = 0) { gapElement.style.color = "green"; } else { gapElement.style.color = "red"; } document.getElementById("ramseyRetirementResult").style.display = "block"; }

Understanding the Ramsey Retirement Approach

Dave Ramsey's approach to retirement planning is built on a foundation of financial discipline, primarily through his "Baby Steps." This calculator helps you visualize the potential outcome of following some of his core investing principles, particularly Baby Step 4: Invest 15% of your gross household income into Roth IRAs and pre-tax retirement plans.

Key Principles Applied in This Calculator:

• 15% of Gross Income: A cornerstone of Ramsey's investing advice is to consistently invest 15% of your gross income into growth stock mutual funds. This calculator uses your provided annual income to determine this recommended contribution.
• Growth Rate: Ramsey often cites historical average returns for good growth stock mutual funds, typically in the 10-12% range. Our calculator defaults to 10% but allows you to adjust it based on your own assumptions or research. It's important to remember that past performance does not guarantee future results.
• Sustainable Withdrawal Rate: To estimate how much annual income your nest egg can provide in retirement, we use a common "safe withdrawal rate," typically 4%. This means you can withdraw 4% of your total nest egg in the first year of retirement, adjusted for inflation in subsequent years, with a high probability of your money lasting throughout retirement.
• Inflation Adjustment: The calculator inflates your desired annual retirement income to account for the rising cost of living over time. This ensures your future income goal is realistic in terms of purchasing power.

How to Use This Calculator:

1. Your Current Age & Desired Retirement Age: Input your current age and the age you plan to stop working. This determines your investment horizon.
2. Current Retirement Savings: Enter the total amount you currently have saved in all retirement accounts (401k, IRA, Roth, etc.).
3. Your Gross Annual Income: Provide your total income before taxes and deductions. The calculator will use this to determine your recommended 15% annual investment.
4. Desired Annual Retirement Income (Today's $): Think about how much you'd need to live comfortably in retirement, expressed in today's dollars. The calculator will adjust this for inflation.
5. Assumed Annual Investment Growth Rate: This is the average annual return you expect your investments to generate. While Ramsey suggests 10-12%, you can adjust this based on your risk tolerance and investment strategy.
6. Assumed Annual Inflation Rate: This accounts for the general increase in prices over time. A common long-term average is 3%.

After entering your details, click "Calculate Your Retirement" to see your projected nest egg, the annual income it could provide, and whether you're on track to meet your desired retirement lifestyle according to Ramsey's principles. If there's a gap, it's a signal to consider increasing your savings, working longer, or adjusting your retirement income expectations.

Important Considerations:

This calculator provides an estimate based on the inputs and assumptions. It does not account for taxes, specific investment fees, Social Security benefits, pensions, or other income sources in retirement. It's a powerful tool for understanding the impact of consistent investing but should be used as a guide for planning, not as definitive financial advice. Always consult with a qualified financial professional for personalized guidance.