Personal Finances

Inputs

How to use this

• Inflate your need. Enter spending in today's dollars. The default 3% inflation grows that number every year — that's why a $5,000/mo need today becomes about $9,000/mo in 20 years.
• Two phases: working & retired. If your retirement age is later than your current age, the model has two phases. Pre-retirement: your balance compounds at the return rate, monthly contributions are added (and grown with inflation to mirror typical salary-based 401(k) saving), no withdrawals are taken, and Social Security/pension/spending are inflated forward so they're in retirement-start dollars when drawdown begins. Post-retirement: contributions stop, and the gap (need minus fixed income) is funded from the portfolio every month. Set retirement age equal to current age to skip the growth phase entirely.
• Contributions matter most when time is on your side. A 30-year-old contributing $1,000/mo at 7% return arrives at 65 with roughly $1.8M from contributions alone — about $420K in actual deposits plus $1.4M from compounding. A 55-year-old doing the same gets only about $175K. The compounding asymmetry is why "the best time to start was 20 years ago" is also the most accurate retirement advice.
• Current age & life-expectancy markers. Entering your current age plots SSA Period Life Table markers on the chart: median lifespan for men and women, plus the ~25th percentile. Markers are conditional on living to your current age — so a 60-year-old has higher expected age-at-death than a 30-year-old, because they've already survived the early-life risks.
• Use a realistic return. The 4% default is conservative. A balanced 60/40 portfolio has historically returned higher, but using a number above your portfolio's actual risk profile produces an optimistic answer. Match the return to the portfolio you'll hold in retirement, not the one you hold now. (The same return is used for both the working and retired years — adjust if your allocation will get more conservative as you near retirement.)
• Pre-retirement risks aren't modeled. The working-phase simulation is just smooth compounding with steady contributions — no job loss, no market crashes during your working years. If you're 10+ years from retirement, a Monte Carlo tool that varies returns year-by-year is more honest about the range of balances you might actually start retirement with.
• Monthly contributions while working. Include everything that goes into retirement accounts each month — your own 401(k)/IRA deferrals plus any employer match, plus taxable brokerage savings earmarked for retirement. The model grows the contribution amount with inflation each year (rough assumption: your salary keeps pace with prices, so you save the same real amount). Set to 0 if you're already retired. The budget tab's Savings & Investing total feeds directly into this field via the Send to Retirement tab button.
• Tax rate matters more than people think. The calculator now splits taxes into Federal and State rates, combined to get your total effective rate on retirement income. The model grosses up your spending target so the portfolio funds the pre-tax amount that, after tax, gives you the net spending you actually want. A combined 18.5% rate (12% federal + 6.5% state/NY) on a $5,000/mo target means the model solves for $6,135/mo in gross withdrawals — about 23% more savings consumed than a pre-tax model would show.
• Estimating Federal and State rates separately. Federal: Common ranges: 5–10% if income is mostly Social Security and qualified dividends; 10–15% for moderate Traditional 401(k)/IRA withdrawals plus SS; 15–22% for large Traditional balances or high pension income. Calculate using IRS tax brackets or an effective rate tool. State: Ranges from 0% (TX, FL, WA, TX, SD, NV) to 13.3% (CA top bracket). NY is ~6.5%, with some favorable treatment of retirement income (pensions, Social Security). Check your specific state's rules—some exclude or cap taxes on retirement distributions.
• Federal + State are combined. The calculator adds the two rates together to get your total blended rate used in all tax calculations. This is a simplification (real tax law has phase-outs and interactions), but it's accurate enough for projection work. If you live in a no-state-tax state, set State to 0% and adjust Federal to your blended federal rate.
• State tax impact: Why people move for retirement. A 3.5% difference in total tax rate can extend or shorten your retirement runway by 5–8 years. Example: retiring at 67 with $1M and withdrawing $5k/mo after tax. NY scenario (12% federal + 6.5% state = 18.5%) depletes at age 79; same scenario in FL or TX (12% federal + 0% state) lasts until age 85–87. The difference is not just the direct tax savings—it's the lost growth on that extra withdrawal year-after-year. High earners in CA (37% federal + 9–13% state), NY, or OR sometimes extend their working years just to reach a no-tax state before drawing. If you're location-flexible, modeling both scenarios in this calculator is worthwhile.
• Social Security timing. Claim age dramatically changes the benefit. Claiming at 62 reduces your benefit ~30% vs. full retirement age; delaying to 70 increases it ~24% above FRA. Model the age you actually plan to claim.
• Three account buckets. The calculator now separates your savings into Traditional (pre-tax 401k/IRA), Roth (tax-free after age 59½), and taxable brokerage. During retirement, it withdraws in your chosen order (Roth-first or Traditional-first) and applies correct tax treatment to each: Traditional withdrawals are fully taxable at your ordinary income rate, Roth withdrawals are tax-free, and brokerage withdrawals are taxed only on gains (at ~15% capital gains rate, with 50% assumed cost basis). This realistic tax modeling makes a big difference in long drawdowns.
• Roth-first vs. Traditional-first. Roth-first (recommended) empties Roth accounts first, preserving their tax-free growth for later years, and minimizes ordinary income tax in early retirement. Traditional-first prioritizes using your deductions (if you have any) and lets Roth money grow longer. Choose based on your tax bracket trajectory: expect to rise → Roth-first; expect to fall → Traditional-first.
• Roth conversions. Convert Traditional IRA/401(k) money to Roth during early retirement (before RMDs kick in at 73) to lock in tax-free growth. Conversions are taxable in the year you do them, so they work best when you're in a low tax bracket (between retiring and claiming Social Security). The calculator models fixed annual conversions and accounts for the taxes you'll owe that year.
• Required Minimum Distributions (RMD). At age 73, the IRS requires you to withdraw a minimum percentage of your Traditional IRA/401(k) balance each year. The calculator enforces this automatically: if your RMD exceeds your normal spending need, you're forced to withdraw (and pay taxes) on the extra amount. This can trigger higher tax brackets or Phase-Outs of deductions. RMDs don't apply to Roth IRAs (a key advantage of Roth conversions in early retirement).
• Brokerage account assumptions. The calculator assumes 50% of your brokerage balance is cost basis (not taxed) and 50% is unrealized gains (taxed at 15% long-term capital gains). If your actual ratio is very different (e.g., 80% basis, 20% gains, or vice versa), the results will overstate or understate tax drag. You can estimate cost basis: total invested / current value.
• Monte Carlo distribution. The retirement calculator now runs 1000 Monte Carlo iterations, each with randomly-sampled annual returns drawn from a normal distribution (mean = your return assumption, standard deviation = 12%, typical market volatility). The chart shows three percentile outcomes: the 10th (10% of runs did worse), 50th/median (middle outcome), and 90th (90% of runs stayed in or below this). This is much more honest about risk than three fixed scenarios — you're seeing the actual distribution of outcomes.
• Interpreting percentiles. If the 10th-percentile line (red) runs out of money at age 85, that means there's a 10% chance your portfolio depletes before 85 — a 90% success rate. If the 50th-percentile (blue median) line lasts to 95, that's a 50/50 coin flip. Most retirement plans aim for 85–90% success, which falls between the red and blue lines.

Withdrawal strategies — pros & cons

This calculator models a fixed-need withdrawal: spend what you need each month, inflated annually, until the money runs out. That's one of several strategies. A few common alternatives and their trade-offs: