Enter your details and click "Calculate" to see your estimated retirement income.
This calculator provides estimates based on the inputs provided and does not account for inflation, taxes, or other potential expenses. It should be used for illustrative purposes only and not as financial advice. Consult a financial advisor for personalized planning.
function calculateRetirementIncome() {
var currentSavings = parseFloat(document.getElementById('currentSavings').value);
var annualContributions = parseFloat(document.getElementById('annualContributions').value);
var yearsToRetirement = parseFloat(document.getElementById('yearsToRetirement').value);
var preRetirementReturn = parseFloat(document.getElementById('preRetirementReturn').value) / 100;
var postRetirementReturn = parseFloat(document.getElementById('postRetirementReturn').value) / 100;
var yearsInRetirement = parseFloat(document.getElementById('yearsInRetirement').value);
var resultDiv = document.getElementById('retirementResult');
if (isNaN(currentSavings) || isNaN(annualContributions) || isNaN(yearsToRetirement) ||
isNaN(preRetirementReturn) || isNaN(postRetirementReturn) || isNaN(yearsInRetirement) ||
currentSavings < 0 || annualContributions < 0 || yearsToRetirement < 0 ||
preRetirementReturn < 0 || postRetirementReturn < 0 || yearsInRetirement <= 0) {
resultDiv.innerHTML = 'Please enter valid positive numbers for all fields. Years in Retirement must be at least 1.';
return;
}
// Calculate Future Value of Current Savings
var fvCurrentSavings = currentSavings * Math.pow((1 + preRetirementReturn), yearsToRetirement);
// Calculate Future Value of Annual Contributions (Future Value of an Annuity)
var fvContributions;
if (preRetirementReturn === 0) {
fvContributions = annualContributions * yearsToRetirement;
} else {
fvContributions = annualContributions * ((Math.pow((1 + preRetirementReturn), yearsToRetirement) – 1) / preRetirementReturn);
}
// Total Savings at Retirement
var totalSavingsAtRetirement = fvCurrentSavings + fvContributions;
// Calculate Estimated Annual Retirement Income (Annuity Payment from Total Savings)
var estimatedAnnualIncome;
if (postRetirementReturn === 0) {
estimatedAnnualIncome = totalSavingsAtRetirement / yearsInRetirement;
} else {
estimatedAnnualIncome = totalSavingsAtRetirement * (postRetirementReturn / (1 – Math.pow((1 + postRetirementReturn), -yearsInRetirement)));
}
resultDiv.innerHTML =
'Projected Total Savings at Retirement: $' + totalSavingsAtRetirement.toLocaleString(undefined, { minimumFractionDigits: 2, maximumFractionDigits: 2 }) + '' +
'Estimated Annual Retirement Income: $' + estimatedAnnualIncome.toLocaleString(undefined, { minimumFractionDigits: 2, maximumFractionDigits: 2 }) + '';
}
Understanding Your Retirement Income
Planning for retirement is one of the most crucial financial steps you can take. It involves understanding how much money you'll need to live comfortably once you stop working and how your current savings and contributions will translate into a sustainable income stream. Our Retirement Income Calculator helps you estimate this vital figure, giving you a clearer picture of your financial future.
What is Retirement Income?
Retirement income refers to the money you receive regularly after you've retired from your primary career. This income typically comes from a combination of sources, including personal savings (like 401(k)s, IRAs, and brokerage accounts), pensions, Social Security benefits, and other investments. The goal is to ensure this income is sufficient to cover your living expenses and desired lifestyle throughout your retirement years.
How the Calculator Works
This calculator uses a standard financial model to project your savings growth and then determine a sustainable annual withdrawal amount during retirement. Here's a breakdown of the key inputs:
Current Retirement Savings: This is the total amount you have saved in all your retirement accounts today. The more you have now, the more it can grow over time.
Annual Contributions to Savings: This is the amount you plan to save each year until retirement. Consistent contributions significantly boost your future nest egg.
Years Until Retirement: The number of years you have left before you plan to stop working. This period allows your investments to grow through compounding.
Expected Annual Return Rate (Pre-Retirement): The average annual percentage gain you anticipate your investments will achieve before you retire. This rate is crucial for projecting your total savings.
Expected Annual Return Rate (During Retirement): The average annual percentage gain you anticipate your investments will achieve while you are withdrawing funds in retirement. A conservative rate is often used here.
Expected Years in Retirement: The number of years you expect to live after retiring. This helps determine how long your savings need to last and influences the sustainable withdrawal amount.
The Calculation Process
Future Value of Current Savings: Your existing savings are projected forward to your retirement date, assuming the pre-retirement return rate.
Future Value of Annual Contributions: Your yearly contributions are also projected forward, accumulating interest over the years until retirement.
Total Savings at Retirement: These two future values are added together to give you an estimated total amount you'll have saved by the time you retire.
Estimated Annual Retirement Income: This total savings amount is then treated as a lump sum from which you'll draw an income over your expected years in retirement, considering the post-retirement return rate. The calculator determines a sustainable annual withdrawal that aims to deplete your savings over the specified period, assuming consistent returns.
Using these inputs, the calculator would first project the growth of the initial $100,000 and the $10,000 annual contributions over 20 years at a 7% return. This would result in a substantial total savings at retirement. Then, it would calculate how much annual income that total sum could generate over 25 years, assuming a 4% return during retirement. This provides a realistic estimate of the annual income this individual could expect.
Important Considerations
While this calculator provides a valuable estimate, remember that it's a simplified model. Factors like inflation, taxes on withdrawals, unexpected medical expenses, and changes in market conditions can all impact your actual retirement income. It's always wise to consult with a qualified financial advisor to create a comprehensive retirement plan tailored to your specific situation and goals.