Realistic Retirement Calculator
Your Retirement Forecast
How to Plan a Realistic Retirement
Planning for retirement involves more than just picking a target number. A truly realistic retirement calculator must account for the eroding power of inflation and the compounding growth of diversified investments. To get an accurate picture, you must consider the duration of your accumulation phase (now until retirement) versus your distribution phase (retirement until life expectancy).
Key Factors in the Calculation
- Inflation Protection: A $5,000 monthly budget today will likely need to be over $12,000 in 30 years just to maintain the same purchasing power, assuming a 3% average inflation rate.
- The Real Rate of Return: This is your investment growth minus the inflation rate. If your portfolio grows at 7% and inflation is 3%, your "real" purchasing power is only growing at 4%.
- The "Safe Withdrawal Rate": Most financial planners suggest the "4% Rule," which implies you should not withdraw more than 4% of your total nest egg in your first year of retirement to ensure the funds last 30+ years.
Example Scenario
Imagine a 35-year-old with $25,000 saved, contributing $1,200 monthly. If they retire at 65 with a 7% return and 3% inflation, they might accumulate approximately $1.6 million. While that sounds like a lot, the inflation-adjusted value in today's dollars would be significantly less, and a sustainable monthly income would be roughly $5,300 (before taxes).
Total Nest Egg at Age " + retAge + ":$" + totalNestEgg.toLocaleString(undefined, {minimumFractionDigits: 0, maximumFractionDigits: 0}) + "
" +
"Monthly Income Needed (Adjusted for Inflation):$" + adjustedMonthlyIncomeNeeded.toLocaleString(undefined, {minimumFractionDigits: 0, maximumFractionDigits: 0}) + "
" +
"Sustainable Monthly Withdrawal (4% Rule):$" + sustainableMonthlyIncome.toLocaleString(undefined, {minimumFractionDigits: 0, maximumFractionDigits: 0}) + "
" +
"Note: This assumes a 4% withdrawal rate for a " + yearsInRetire + "-year retirement. Calculations are estimates based on compounding growth and historical inflation averages.";
}