This calculator helps you estimate how much annual income you can generate in retirement based on your current savings, future contributions, expected investment growth, and desired lifestyle. It's a crucial tool for financial planning, allowing you to see if you're on track to meet your retirement goals.
How it Works:
The calculator performs a two-step calculation:
Projected Savings at Retirement: It first estimates the total value of your retirement nest egg by the time you reach your desired retirement age. This is done by compounding your current savings and adding your annual contributions, all growing at your expected annual rate of return.
Sustainable Withdrawal Rate: Based on the total projected savings and your desired retirement duration, it calculates a sustainable annual income. This is often based on a "safe withdrawal rate" principle, which aims to ensure your savings last throughout your retirement. For simplicity, this calculator estimates the annual income by dividing the total projected savings by the expected retirement duration, assuming a consistent income stream. A more sophisticated model would incorporate inflation and varying withdrawal rates.
Inflation: This calculator does not explicitly account for inflation. The purchasing power of your retirement income will decrease over time due to inflation.
Investment Risk: Expected returns are not guaranteed. Actual investment performance may vary significantly.
Taxes: Retirement income may be subject to taxes, which are not factored into this calculation.
Life Expectancy: Exceeding your expected retirement duration will deplete your savings.
Withdrawal Rate: The simple division by retirement duration is a basic estimate. Financial advisors often use more complex models (like the 4% rule, adjusted for individual circumstances) to determine a sustainable withdrawal rate.
Use this calculator as a guide to understand your retirement outlook and to prompt further discussions with a financial advisor to create a comprehensive retirement plan.
function calculateRetirementIncome() {
var currentAge = parseFloat(document.getElementById("currentAge").value);
var retirementAge = parseFloat(document.getElementById("retirementAge").value);
var currentSavings = parseFloat(document.getElementById("currentSavings").value);
var annualContributions = parseFloat(document.getElementById("annualContributions").value);
var expectedAnnualReturn = parseFloat(document.getElementById("expectedAnnualReturn").value);
var desiredAnnualIncome = parseFloat(document.getElementById("desiredAnnualIncome").value); // Used for context, not direct calculation in this simplified model
var retirementDuration = parseFloat(document.getElementById("retirementDuration").value);
var resultElement = document.getElementById("incomeResult");
// Input validation
if (isNaN(currentAge) || isNaN(retirementAge) || isNaN(currentSavings) ||
isNaN(annualContributions) || isNaN(expectedAnnualReturn) || isNaN(desiredAnnualIncome) ||
isNaN(retirementDuration) ||
currentAge < 0 || retirementAge < 0 || currentSavings < 0 ||
annualContributions < 0 || expectedAnnualReturn < 0 || desiredAnnualIncome < 0 ||
retirementDuration <= 0 || retirementAge 0 && growthRate > 0) {
futureValueOfContributions = annualContributions * (Math.pow(1 + growthRate, yearsToRetirement) – 1) / growthRate;
} else if (annualContributions > 0 && growthRate === 0) {
futureValueOfContributions = annualContributions * yearsToRetirement;
}
var totalSavingsAtRetirement = futureValueOfCurrentSavings + futureValueOfContributions;
// Calculate estimated annual income
var estimatedAnnualIncome = totalSavingsAtRetirement / retirementDuration;
// Format the result
resultElement.textContent = "$" + estimatedAnnualIncome.toFixed(2);
}