Frequently asked questions
What return rate should I use for retirement planning?
A balanced portfolio of stocks and bonds has historically returned 6-8% annually before inflation. Use 6-7% for conservative planning, or 4-5% if you're already near retirement and have shifted to bonds. The key is using a rate you're confident about sustaining over decades, not an optimistic peak-market figure.
How does the sustainable income calculation work?
It uses the annuity drawdown formula: your savings continue to earn returns in retirement while you withdraw monthly. The calculation accounts for inflation so the income figure is in today's purchasing power. It assumes you draw down the entire balance over your chosen retirement duration.
What if I have a pension or government benefit too?
Reduce your 'desired monthly income' by the amount you expect from other sources (pension, Social Security, or equivalent). This calculator shows what your personal savings need to cover on top of those guaranteed income streams.
Should I worry about inflation in retirement?
Yes. At 3% inflation, prices roughly double every 24 years. A retirement lasting 25-30 years means your expenses could more than double. This calculator adjusts for inflation automatically. The sustainable income figure reflects real purchasing power, not just nominal dollars.
What's the difference between this and the compound interest calculator?
The compound interest calculator shows raw growth of money over time. This retirement calculator adds the critical second question: will that money sustain the income you need? It factors in inflation, calculates sustainable withdrawal rates, and tells you whether you're on track or falling short.
How accurate is a retirement projection 30+ years out?
It's an estimate based on constant assumptions. Real returns vary year to year, inflation fluctuates, and your contributions may change. Use it as a planning baseline and revisit annually. The value is in the direction it gives you (save more, invest longer, adjust expectations) rather than an exact figure.