# Retirement Calculator

Updated on: Aug 1, 2024

By using this calculator, what I really want you to understand is that “How much is enough for my retirement?” is the wrong question. The right question is “What does a retirement income calculator tell you about your specific situation?”

This simple calculator assumes that you’ll be retired for 30 years (to protect yourself from running out of money before you die). Note that this is a conservative estimate because assuming you retire at 65 – American women will live, on average, 14 years beyond 65 and men will live 8 years beyond 65—to ages 79 and 73, respectively. (Now you see why I want you to live your Rich Life now.)

## How to use this calculator

Just key in:

• How much you want to make in retirement every year
• How much retirement savings you already have

And the calculator will show you how much more retirement savings you’ll need, assuming the 4% rule.

This is based on Bill Bengen’s “4 percent rule,” which says that you can safely withdraw 4 percent of your portfolio every year of retirement—including increasing your withdrawals based on inflation—and not run out of money within 30 years

## Other things to consider

After doing the calculations, you might be surprised with how much more you have to save, but don’t be alarmed because this calculator:

• Doesn’t take into account the growth of your investments
• Assumes you will make zero dollars while retired, and
• Projects a conservative 30 year retirement

We also haven’t accounted for your social security benefits, any pensions you may have, your asset allocation, or the more technical aspects of “spend-ing flexibility” (such as cutting spending if the stock market performs poorly). If you’ve paid off your house, you won’t need to spend nearly as much. If you’ve invested in tax-advantaged accounts, you’ll also pay less in taxes.

Other assumptions include that you’ll keep spending the same amount in retirement which won’t necessarily be the case. You might spend far less because you’re no longer commuting or you’ve downsized. Do you plan to travel a lot? You might spend more! What if one of you gets sick? Suddenly, you might not travel at all (but have huge medical bills).

Retirement planning doesn’t have to be rigid or overly complex. Instead of treating the numbers as inflexible ultimatums, use them as a guiding framework for your planning. Be open to adjusting your approach as your circumstances change, and remember that flexibility is key to a successful and stress-free retirement.

## If you’re looking for an easy number to aim for…

\$1.8 million. That’s how much you and your partner need to comfortably retire.

Let me explain.

• Retirement age: Let’s say you retire at 65.
• How long you’ll live: As of writing this, American women will live, on average, 14 years beyond 65, and men will live 8 years beyond 65—to ages 79 and 73, respectively.
• Income: Assume you make the median household income of \$70,784 and want to continue your lifestyle in retirement.
• You need: \$1.8 million (\$1,770,100, to be exact).

That number isn’t random. It’s based on financial advisor Bill Bengen’s “4 percent rule,” which says that you can safely withdraw 4 percent of your portfolio every year of retirement—including increasing your withdrawals based on inflation—and not run out of money within 30 years. (To simplify the actuarial science, we use 30 years because you want to protect yourself from running out of money before you die.) Some bozos claim you can safely withdraw 8 percent per year (and “easily” make 12 percent in the market), but 4 percent is much more realistic. I cover this in more depth in I Will Teach You to Be Rich.

If you have \$1.8 million in your portfolio, you can safely withdraw \$72,000 per year—which, in this example, is exactly the current income you’re living on. You wanted to know the number, so there you go.

## Other retirement resources

Now that you have a rough idea of your retirement number, feel free to check out my other posts on retirement:

Or, listen to a couple that came on my podcast who are nearing retirement but are worried about having enough:

Ramit Sethi

Host of Netflix’s “How to Get Rich”, NYT Bestselling Author & host of the hit I Will Teach You To Be Rich Podcast. For over 20 years, Ramit has been sharing proven strategies to help people like you take control of their money and live a Rich Life.