Planning for retirement following the Dave Ramsey methodology focuses on consistency, the power of compound growth, and the elimination of debt. According to Ramsey's "Baby Steps," retirement investing begins at Baby Step 4, where you invest 15% of your gross household income into tax-advantaged accounts like 15% in Roth IRAs and 401(k)s.
How This Calculation Works
This calculator uses the Future Value formula to project how your current savings and future contributions will grow over time. We use a compounding period of 12 months per year. Ramsey often references a 10-12% average annual return based on the historical performance of the S&P 500, though many conservative planners use 7-8% to account for inflation.
The 4% Rule for Sustainable Income
Once you reach your retirement age, the goal is to live off the growth of your investments without depleting the principal. A common benchmark is the 4% rule, which suggests that if you withdraw 4% of your total nest egg in the first year of retirement, your money has a high probability of lasting 30 years or more.
Monthly Investment
Years to Grow
Growth Rate
Final Nest Egg
500
30
10%
1,130,244
1,000
25
10%
1,326,833
1,500
20
10%
1,139,050
Key Factors in Your Retirement Success
Time: The earlier you start, the more "heavy lifting" compound growth does for you.
Consistency: Automated monthly contributions ensure you "pay yourself first" regardless of market fluctuations.
Growth Rate: Diversifying in good growth stock mutual funds is the cornerstone of the Ramsey approach.
function calculateRamseyRetirement() {
var currentAge = parseFloat(document.getElementById('currentAge').value);
var retireAge = parseFloat(document.getElementById('retireAge').value);
var currentBalance = parseFloat(document.getElementById('currentBalance').value) || 0;
var monthlyInvest = parseFloat(document.getElementById('monthlyInvest').value) || 0;
var growthRate = parseFloat(document.getElementById('growthRate').value) / 100;
if (!currentAge || !retireAge || retireAge 0) {
fvContributions = monthlyInvest * ((Math.pow((1 + monthlyRate), monthsToGrow) – 1) / monthlyRate);
} else {
fvContributions = monthlyInvest * monthsToGrow;
}
var totalNestEgg = fvCurrentBalance + fvContributions;
// 4% Rule Monthly Income
var annualWithdrawal = totalNestEgg * 0.04;
var monthlyWithdrawal = annualWithdrawal / 12;
document.getElementById('nestEggTotal').innerText = '$' + totalNestEgg.toLocaleString(undefined, {minimumFractionDigits: 0, maximumFractionDigits: 0});
document.getElementById('monthlyWithdrawalText').innerHTML = 'Based on the 4% rule, this nest egg could provide approximately $' + monthlyWithdrawal.toLocaleString(undefined, {minimumFractionDigits: 0, maximumFractionDigits: 0}) + ' in monthly income.';
document.getElementById('resultArea').style.display = 'block';
}