Determine exactly when you can stop working based on your financial trajectory.
Retirement Analysis
How to Calculate Your Retirement Readiness
Planning for retirement is fundamentally a math problem based on your Safe Withdrawal Rate (SWR) and your Target Nest Egg. This calculator uses the "Rule of 25" (the inverse of a 4% withdrawal rate) to determine when your invested assets will be large enough to cover your annual expenses indefinitely.
Key Retirement Variables Explained
Current Nest Egg: This is the total value of your accessible retirement accounts (401k, IRA, Brokerage).
Annual Portfolio Growth: The expected average yearly return on your investments. While the S&P 500 averages roughly 10% historically, many planners use 6-7% to account for inflation.
Safe Withdrawal Rate: The percentage of your portfolio you plan to withdraw each year in retirement. 4% is a standard industry benchmark.
Retirement Spending Goal: The amount of money you expect to spend annually once you stop working, adjusted for today's purchasing power.
Real-World Example
Imagine a 35-year-old with $100,000 already saved. They contribute $20,000 per year to their portfolio. They want to spend $80,000 annually in retirement. Using a 4% withdrawal rate, their target nest egg is $2,000,000 ($80,000 / 0.04). If their portfolio grows at 7% annually, they would reach financial independence at age 57.
The Importance of the Withdrawal Rate
Lowering your withdrawal rate (e.g., to 3%) increases your safety margin but requires a much larger nest egg, meaning you may have to work longer. Increasing your withdrawal rate (e.g., to 5%) allows for an earlier retirement but increases the risk of exhausting your funds during a market downturn.
function calculateRetirement() {
var currentAge = parseFloat(document.getElementById('currentAge').value);
var growthRate = parseFloat(document.getElementById('growthRate').value) / 100;
var currentSavings = parseFloat(document.getElementById('currentSavings').value);
var annualContribution = parseFloat(document.getElementById('annualContribution').value);
var annualSpending = parseFloat(document.getElementById('annualSpending').value);
var withdrawalRate = parseFloat(document.getElementById('withdrawalRate').value) / 100;
if (isNaN(currentAge) || isNaN(growthRate) || isNaN(currentSavings) || isNaN(annualContribution) || isNaN(annualSpending) || isNaN(withdrawalRate)) {
alert("Please enter valid numerical values in all fields.");
return;
}
if (withdrawalRate <= 0) {
alert("Safe Withdrawal Rate must be greater than zero.");
return;
}
// Calculate Target Nest Egg
var targetNestEgg = annualSpending / withdrawalRate;
var years = 0;
var balance = currentSavings;
var maxYears = 100; // Prevention for infinite loops
while (balance < targetNestEgg && years = maxYears) {
summary.innerHTML = "Based on these numbers, your portfolio may not reach the target within a standard timeframe. Consider increasing contributions or lowering spending.";
goalText.innerHTML = "Target Nest Egg: $" + targetNestEgg.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
} else if (balance >= targetNestEgg && years === 0) {
summary.innerHTML = "Congratulations! You are already financially independent and can retire now.";
goalText.innerHTML = "Current Nest Egg exceeds Target: $" + targetNestEgg.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
} else {
var retirementAge = currentAge + years;
summary.innerHTML = "You can retire in " + years + " years at age " + retirementAge + ".";
goalText.innerHTML = "Projected Nest Egg Needed: $" + targetNestEgg.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
}
resultArea.scrollIntoView({ behavior: 'smooth', block: 'nearest' });
}