- Retirement calculators provide a rough estimate of how your invested savings will grow over time.
- Our retirement calculator tracks your retirement savings progress and shows if you might fall short.
- Compare the estimated retirement funds with the amount you will need by your desired retirement age.
Taking advantage of the compound growth, tax advantages, and investment opportunities provided by the best retirement plans is the first step in building long-lasting wealth. But how do you know if you've contributed enough to support yourself during your golden years?
Business Insider's free retirement calculator offers free estimates to help you plan accordingly based on personal details like your life expectancy, income, expected expenses, and estimated retirement age.
Here is how you can use an online retirement calculator and the information you need to generate an accurate estimate.
Retirement Calculator
Use Insider’s calculator to see if you’re on your way to a comfortable retirement by answering a few questions about yourself, your savings, and how long you expect to keep working.
70% of pre-retirement income
*Need is based on covering 70% of your annual pre-retirement income and a life expectancy of 100 years.
Understanding retirement calculators
What is a retirement calculator?
Retirement calculators are free online planning tools that estimate how your invested savings will grow based on personal and economic factors.
"If you start investing in your retirement plans in your early 20s, the more likely you'll have a larger pool of money to support you in retirement than if you start saving and contributing to retirement accounts later in life," says Chloe Wolhforth, financial planner and senior managing director at Angeles Investments.
Business Insider's retirement calculator, above, is designed to track your savings progress with detailed retirement projections. It's based on the idea that Americans generally spend less as they age and can sustain a 30- to 40-year retirement on 70% of their pre-retirement income.
The calculator generates two important numbers:
- The amount you will have by your desired retirement age. By providing your current savings rate and retirement account balances, the retirement calculator can estimate how much money you'll have in savings or investments by retirement.
- The amount you will need by your desired retirement age. Using your current income and expected salary increases, the retirement calculator can estimate how much money you'll need in savings or investments by retirement.
How much you'll need to retire may be more or less than the 70% rule of thumb, depending on your lifestyle. For a more accurate estimate of how much you can expect to spend in retirement, consult a financial advisor.
Why you need a retirement calculator
The best retirement calculators estimate how much you need to save for your future using personal and financial information. A general rule of thumb is that the earlier you start saving, the better.
Investing your savings and accumulating compound interest is the best way to grow long-term wealth. Now is the time to start if you're not already contributing to a retirement savings plan like a 401(k) or IRA.
Inflation is considered when calculating retirement savings. But remember, a retirement calculator can't predict the future, and the actual inflation rates may vary. It can't predict market crashes, failed investments, or future financial hardships. It is only one of many financial planning tools you need to ensure a comfortable retirement.
How to use a retirement calculator
Input your personal and financial information
For the retirement calculator, we define a comfortable retirement as living on 70% of your pre-retirement income. However, the calculator is customizable. If you're able, incorporate as many specific details as possible.
Here's what you'll need to input:
- Personal information: Current age and the age at which you expect to retire.
- Current retirement balance: The total retirement savings across all your accounts, including 401(k)s and IRAs.
- Current household income: Your annual gross income (the amount you earn before taxes).
- Rate of savings: How much money you save toward retirement each month. You can enter this as a dollar amount or a percentage of your income.
The following inputs are pre-filled, but you can change some to customize your retirement calculation further.
- Expected annual salary increases: How much do you expect your salary to increase each year? The calculator's default is 2%.
- Anticipated monthly spending in retirement: We assume you'll spend 70% of your pre-retirement income (the amount you're projected to earn right before you retire), but you can change that number if you expect to spend more or less.
- Life expectancy: How long do you expect to live? The default calculation uses a life expectancy of 100 years.
- Investment returns: We assume your savings are invested and earn a 5% annual rate of return. If your retirement savings aren't invested, you may be missing out on earnings through capitalizing on compound interest.
Check out Business Insider's guide on CAGR>>
Analyze the results of the retirement calculator
Don't be discouraged if the retirement calculator shows you fall short of your financial target. There's still time to adjust your savings rate or investment strategy to meet your goal.
Increasing your income is one of the most effective ways to catch up on retirement savings. If you cannot score a raise in your current position, consider switching jobs for a higher salary or better benefits, such as a more generous 401(k) match, or investing in stocks and similar assets.
Other strategies you can consider are maxing out your 401(k), contributing to a Roth or traditional IRA, or working with a financial advisor to boost your savings further.
"Investing is a critical part of growing wealth. It is important to invest savings that you have identified as long-term so your assets can grow over time," Wolhforth says.
Above all, be flexible. As you approach retirement, consider taking a part-time job, waiting to claim Social Security benefits, downsizing your home, or relocating to a more affordable city.
Benefits of using a retirement calculator
Using a retirement calculator to see where you stand provides several perks. Here are some of the benefits of retirement calculators:
- Snapshot of your future: A rough estimate of how much money you'll need to retire by a certain age is better than having no estimate.
- Identify shortfalls: The calculator shows if you might fall short of your financial goal, allowing you to plan for a higher savings rate or find supplementary income sources.
- See your options: By adjusting the calculator's inputs — such as changing your savings rate or your planned retirement age — you can see how your overall plan is affected.
"Depending on when you want to retire, your employment, your tax status, and other considerations, a blend of multiple accounts may be suitable," says Jordan Gilberti, senior financial planner at Facet.
FAQs about retirement calculators
The accuracy of a retirement calculator can vary, but it is always a rough estimate. Online calculators cannot predict economic shifts or financial hardships that may impact invested funds. Retirement calculators provide estimates based on your inputs, but their accuracy depends on the data you provide and the assumptions used.
The information you need to use a retirement calculator includes details about your current savings, income, retirement age, expected expenses, and similar data. Retirement calculators also adjust estimations based on predicted inflation and compound growth.
A retirement calculator can help you save more by revealing whether your current contributions and investment strategy are on track. Based on your estimated retirement age and preferred lifestyle, you can better gauge how long your savings will last. It helps to set realistic goals and adjust your retirement saving strategies accordingly.
Many free retirement calculators are reliable financial planning tools using standard financial models. However, retirement calculators only provide estimates, so the generated rate of return may not always be accurate. If you're worried about coming short, consider consulting a financial advisor to help grow your retirement savings.
You should use a retirement calculator on an annual basis or whenever your financial situation changes. It is a good idea to recalculate your estimated retirement savings if you change your salary deferral rate, have increased income, or are considering withdrawing from your retirement savings to afford other expenses.
