Plain Finance

Retirement Calculator

Most retirement calculators tell you what you will have. This one also tells you whether it lasts — including what happens when the same average return arrives in an unlucky order, which is the risk a flat average hides completely.

You

Saving

Spending

Social Security, a pension, rental income.

At retirement you would have

$1,740,372

worth $829,709 in today's money

On a steady 5% return the money lasts to 95.

You pay in
$435,000.00
First-year withdrawal
$76,373.82
Withdrawal rate
4.39%
Left at 95
$572,764

If the bad years come first

Runs out at 88.8

Take the identical returns in a different order — the bad years first — and the same plan runs out at 88.8. Same average, same volatility, and reversing the order makes it last again.

Your savings, up and then down

The marker is your retirement date. Both drawdown paths use the same average return — the dashed one just meets its bad years first.

  • Bad years first
  • Steady return

Saving is the easy half

Building the balance is largely a matter of arithmetic and patience, and our compound interest calculator covers it in more detail. Contribute steadily, leave it alone, and time does most of the work.

Spending it down is a different problem, and a much harder one. You no longer have decades for a bad market to recover in, you are selling assets rather than buying them, and the thing you are managing is not a number but a duration: it has to last as long as you do.

So this calculator runs both phases. It grows your savings to your retirement date, then draws them down against spending that rises with inflation, offset by whatever other income you have. What it reports is not just a balance but an outcome: the money lasts, or it runs out at a specific age.

The risk almost every calculator hides

Type a 5% return into a retirement calculator and it will apply 5% every year, evenly, for thirty years. No market has ever done that. Real returns arrive as a jagged sequence of good and bad years that happens to average out — and while you are withdrawing, the order matters enormously.

The reason is simple once stated. If the market falls 25% in your first year of retirement, you still need to eat, so you sell assets at the bottom to fund the year. Those assets are gone; they are not there to recover when the market does. The pot that has to last thirty years is permanently smaller. Meet the same crash in year 25 and it barely matters, because by then you have already spent most of what you needed.

While you are still saving, this works in reverse — an early crash is a chance to buy cheaply. Sequence risk is specifically a problem of the withdrawal phase, which is why it gets so little attention from calculators aimed at savers.

How this page proves it

Not with a Monte Carlo simulation, which is powerful but hard to check and easy to hide assumptions inside. Instead, with a comparison that is difficult to argue with.

The calculator builds one fixed list of annual returns that averages exactly the rate you entered. Then it runs your plan twice: once with that list forwards, so the bad years come first, and once backwards, so they come last.

Identical returns. Identical average. Identical volatility. Identical balance on the day you retire. The only difference is the order — so any difference in outcome is caused by nothing else.

On the plan loaded above, that difference is decisive. At a steady 5% the money lasts comfortably to 95. Hit the same returns with the bad years first and it runs out at 88 — seven years short, on a plan a flat-average calculator would have called a success.

What actually reduces the risk

  • Guaranteed income. Social Security, a pension, or an annuity covers part of your spending regardless of what markets do, so a bad year forces fewer sales. Claiming Social Security later raises this permanently and is inflation-adjusted for life.
  • Flexible spending. Cutting back in bad years — skipping the big trip, not replacing the car — is the single most effective defence, because it directly reduces selling at the bottom. Rigid inflation-adjusted spending is what the 4% rule assumes and what makes it fragile.
  • A cash buffer. One to two years of spending held outside the market means an early crash need not be met by selling at all.
  • A lower withdrawal rate. The most reliable lever, and the least popular. Every percentage point you take out is a percentage point that cannot recover.
  • Working a little longer, or a little. Even part-time income early in retirement disproportionately protects the plan, because it covers exactly the years when selling hurts most.

What this does not model

Taxes, which is the largest omission. Withdrawals from a traditional 401(k) or IRA are taxable income, Roth withdrawals generally are not, and the mix changes what you can actually spend by a substantial margin. It also assumes spending stays flat in real terms, whereas real retirement spending often dips in the middle years and rises sharply for healthcare later. It does not model long-term care, annuity purchases, a mortgage being paid off partway through, or market returns as anything other than the pattern described above.

Use it to understand the shape of the problem and to test how sensitive your plan is to things going wrong early. For a plan you are about to act on, a fee-only financial planner with your actual tax position in front of them is worth the money.

Frequently asked questions

How much do I need to retire?

The common shorthand is 25 times your annual spending, which is the 4% rule turned around. If you expect to spend $60,000 a year and $24,000 of that comes from Social Security, you need to cover $36,000 from savings — so roughly $900,000. That is a starting point rather than an answer, because it ignores taxes, whether your spending will actually stay flat, and how long you will live. Use the calculator above with your real numbers instead, and pay attention to the sequence-risk result rather than only the headline.

What is the 4% rule, and does it still work?

It comes from research into historical US market data suggesting that withdrawing 4% of your starting balance, then adjusting that amount for inflation each year, survived a 30-year retirement in essentially every historical period tested. It is a useful anchor and a poor guarantee. It assumes a particular asset mix, a 30-year horizon, no fees, and that the future resembles the past. Treat 4% as a sanity check on your withdrawal rate — the calculator above shows yours — rather than as a rule that makes the plan safe.

What is sequence-of-returns risk?

The risk that your returns arrive in an unlucky order. While you are saving, order barely matters — a crash is a chance to buy cheaply. Once you are withdrawing, it matters enormously, because a bad early market means you are selling assets to live on while they are cheap, permanently shrinking the pot that has to recover. Two retirees with identical average returns can have completely different outcomes depending purely on which decade the bad years landed in. This is the single biggest thing a flat-average calculator misses.

How does this calculator show sequence risk?

Without a Monte Carlo simulation, and in a way that is hard to argue with. It takes one fixed list of annual returns averaging the rate you entered, then runs your plan twice: once with that list forwards, so the bad years come first, and once backwards, so they come last. Identical returns, identical average, identical volatility, identical balance on the retirement date. Any difference in outcome is caused purely by order. On the default plan the difference is the difference between the money lasting and running out at 88.

Should I use a lower return in retirement than while working?

Most people do, and the calculator has separate fields for that reason. The usual logic is that you shift toward bonds and cash as you approach retirement to reduce volatility, accepting lower expected returns in exchange for a smoother ride. That trade is directly about sequence risk: the smoother ride is worth paying for precisely because a bad early sequence is so damaging once you are withdrawing. How far to shift is genuinely contested, and going too conservative brings its own risk of simply running out.

How do I account for Social Security?

Enter it in the other income field, in today’s money — the calculator inflates it along with your spending. Get your actual estimate from ssa.gov rather than guessing, because the amount varies a great deal with your earnings record and the age you claim. Claiming later raises the monthly amount substantially, and since it is inflation-adjusted income that lasts as long as you do, it does more to protect against both longevity and sequence risk than an equivalent lump sum would.

What is this calculator not telling me?

Taxes, above all — withdrawals from a traditional 401(k) or IRA are taxable income, and the difference between pre-tax and Roth balances materially changes what you can actually spend. It also assumes flat inflation-adjusted spending, whereas real retirement spending often falls in the middle years and rises sharply for healthcare later. It does not model long-term care, annuities, or a mortgage being paid off partway through. And it is a projection under assumptions you supplied, not a forecast.