How we worked it out
Updated as you change the numbers.
- Savings grow for 30 years at 6% to $1,239,089.67.
- The income to fund, $36,000.00 in today’s dollars, is $75,512.43 after 30 years of inflation.
- Funding that, rising with inflation, for 27 years at 4.5% takes $1,603,943.10.
Method and assumptions
Savings grow monthly at the pre-retirement return. The nest egg needed is the present value, at retirement, of an income that rises with inflation each year until your plan-until age, withdrawn at the start of each year and earning the in-retirement return meanwhile. Taxes are not modeled: enter income needs before tax, or use after-tax returns. Real returns vary, so treat this as a planning estimate.
Questions
What is the 4% rule?
A rule of thumb that withdrawing 4% of savings in the first year, then adjusting for inflation, has historically lasted about 30 years. $60,000 a year would need about $1.5 million.
Sources
- Investor.gov (SEC): compound interest and saving basics
- IRS: retirement plans and contribution limits
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