Retirement Income Calculator: How Much Will You Have?

Play around with this retirement income calculator to grow your retirement savings and plan your nest egg

Saving for retirement is one of the biggest decisions you’ll ever make but also one of the toughest. Not only do you need to guess at how much prices will be decades into the future but unknowable factors like investment returns and how long until you retire.

Do it right and your nest egg will last throughout your retirement, providing for everything on your bucket list.

Miss your goals or fail to plan completely and you’ll be forced to make ends meet on $1,170 a month. That’s the average social security payout after taxes and means ramen noodles for the rest of your life.

Fortunately, it gets a little easier with a good retirement income calculator.

I designed this nest egg calculator to be as simple as possible but still detailed enough to help you meet your retirement savings goals. It will not only help you find how high your nest egg will reach but the monthly income you can expect.

Scroll down below the calculator for detail on how to use it and how to grow your retirement savings faster.

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How to Use the Retirement Income Calculator

A good retirement income calculator will help you find a balance between saving for the future and living for today. Saving for retirement is tough. There are so many uncertainties that I think some people save too much, needlessly sacrificing today, while others avoid saving altogether.

Using a simple calculator can help give you the assurance that you’re on the right track and can enjoy your money or it can give you the kick in the butt you need to start saving a little more.

You only need five numbers to use this retirement calculator. Some of them you’ll have to estimate while others you’ll already know. Not only will it help you plan out your savings but working through the calculator can also help motivate you to keep on the path and meet your goals.

The first step is writing down how much you’ve already saved. It’s a retirement income calculator but you can also use it for other savings goals like college tuition and that dream vacation.

Next, estimate how much it will cost to meet your retirement savings goal. Don’t just pick a big, round number like $1 million. If you haven’t already, answer a few questions about your retirement.

  • What does retirement look like for me?
  • What have I always wanted to do that I think I’ll get to in retirement?
  • Are my retirement goals the same throughout retirement?

What do you want to do every day in retirement? What are your passions? Answering these questions will not only help you estimate how much retirement will cost but will help motivate you like no guesstimate ever could.

This is going to give you a mental picture of your retirement, a visual dream you can reach for. Anytime you feel like you’re busting your budget or tired of saving, take out that mental picture and think on all the great things retirement will bring.

The next number you’ll need to write down is how much can you put to your retirement savings. If you don’t know about how much you have left over each month, put together a quick budget.

This number doesn’t have to be exact because you’re going to adjust it a little depending on the results of the income calculator.

The interest rate you use for your savings is the most uncertain. Too many people assume they can earn 10% or better on all their retirement savings and for decades because stocks have produced something like that over a period.

They end up investing everything in the stock market, freak out when the market crashes and sell at the worst possible moment. The average investor actually earned just 4.6% annually over the decade to 2015 according to researcher DALBAR because of these bad investing behaviors.

A better estimate is a return of 6% on a diversified portfolio of stocks and bonds.

How many years to retirement is a deceptively easy question to answer. Most people assume they’ll work until 67 but then decide to take early retirement. Others are forced to retire by illness or job loss.

You might want to estimate your retirement at 62 to be on the safe side. This will force you to save a little more money but will help you be ready for anything.

Finally, you don’t necessarily have to put anything in for current expenses. I included it so people could easily see how their retirement income stacks up against current spending. It doesn’t factor into the nest egg calculator so don’t worry about it.

Once you’re done, click calculate and you’ll be shown three numbers.

  • Number of months to reach your retirement savings goal – This could be way past your planned retirement if you’re not saving enough or you might get there sooner.
  • Estimated savings at retirement – This is how far you’ll get with your current monthly savings and interest rate up until your planned retirement.
  • Estimated retirement income – This uses the 4% withdrawal rule of retirement savings, i.e. 4% times the estimated savings at retirement. It doesn’t include taxes or social security.

Let’s look at the retirement income calculator with an example.

Marilyn has $25,000 saved to her retirement savings goal of $1 million in 25 years. She estimates she can save $250 a month and will earn 6% on her portfolio.

retirement income calculator example

On that rate of savings, it will take Marilyn 529 months to save her target retirement goal, that’s just over 44 years. The calculator also shows that she’ll have approximately $271,890 when she reaches her planned retirement age and an estimated $906 before taxes to spend each month (if she withdraws 4% of her total savings each year).

how to calculate retirement savings and incomeObviously, this isn’t going to work for Marilyn. She’ll need to save more each month and maybe lower her expectations a little for retirement.

If you don’t get the numbers you want from the retirement calculator, play around with it to find your balance. Saving a little more each month will go a long way if you extend the time to retirement by a few years.

Check out all our financial calculators to help grow your nest egg!

How to Grow Your Retirement Savings Faster

The retirement income calculator might be a loud wake-up call for a lot of people. Don’t get discouraged though. It doesn’t take much to really boost your retirement savings.

For example, increasing her savings by just $50 a month, earning 1% more per year and stretching retirement out two years would mean an extra $152,000 for Marilyn’s retirement. That’s an extra $500 a month in income.

You can play around with your retirement savings goal, interest rate and years to retirement to find the balance that works for you but there are also ways to make your savings grow faster.

Part of any good investing strategy is a diversified portfolio of stocks, bonds, real estate and other assets. A big part of your decision is how much you invest in each according to your age, financial goals and tolerance for risk.

Adding alternative investments to your portfolio, even if it’s just 10% of your wealth, can really help boost your total return.

I’ve added two investments to my portfolio over the last several years and have booked consistent, double-digit returns. The higher returns from just these two investments have increased my portfolio return to 9% even with a large safety-net of bonds.

Real Estate Crowdfunding is my favorite new way to invest in real estate. I’ve always loved real estate investing, it’s where I started my professional career, but it’s full of pitfalls and money traps.

With real estate crowdfunding, you can invest as little as $1,000 in individual properties. You get professional management and consistent cash flow from both debt and equity investments without all the headaches of traditional real estate investing.

I invest on RealtyShares and PeerStreet to get access to as many deals as possible. I’ve written a review of each as well as a study of crowdfunding real estate returns, around 9% for debt and averaging 12% for equity.

Browse real estate investments for free – open an account on RealtyShares

I’ve been investing in peer loans on Lending Club for years and have averaged just over 10% return. I like P2P investing because loans provide a return similar to stocks but some of the safety of bonds.

I invest conservatively in loans to people with stellar credit, low debt-to-income, mortgages and high monthly income. This keeps my defaults exceptionally low and returns high. It will also help protect my portfolio when the economy turns and the stock market tumbles.

Check out these three Lending Club investing strategies for any type of investor.

nest egg calculator

This retirement income calculator won’t do the hard part for you but it will give you the peace of mind to know that your nest egg is on track. Saving for retirement is tough enough, you shouldn’t have to guess at the numbers. Play around with the calculator and come back every five- or ten-years to see how your retirement savings are developing.