Retirement Income Calculator

Understanding your retirement income can help you build a better budget and determine whether you should save more. Once you complete the following sections, you’ll see an estimated yearly breakdown of your retirement income based on your entries. 

Personal

To calculate your retirement income, we ask for several key pieces of information about your current situation, including: 

• Current age: Your age tells us how long you have to save for retirement. The younger you are, the more you can save in the long run. 
• Annual income (before taxes): Your gross annual income will help the monthly retirement income calculator predict how much of your income can be used for retirement savings. 
• Age at retirement: The age of your retirement compared to your current age tells us how many years you have left to save. 
• Monthly wages during retirement: Your monthly wages during retirement depend on various factors, such as your current savings and Social Security benefits. 

Projections

Projections help the monthly retirement income calculator plan for the future by telling us your life expectancy and estimating the cost of living. 

• Life expectancy: The calculator must ensure you have a monthly income for the remainder of your life after retirement. Setting a life expectancy will tell us how many months we should calculate. 
• Initial living expenses: Your initial living expenses include all the things you pay for now, such as your mortgage or rent payments, electricity and gas bills and groceries. 
• Intermediate living expenses: Your intermediate living expenses account for financial changes in your life, which may cause your total cost of living to increase in the short term. 
• Remainder of retirement: The remainder of your retirement tells the retirement payout calculator how much more you’ll need for your retirement, which takes into account various factors, like how you’ll spend your money. For instance, if you want to travel more, you can add those expenses here to help us calculate your total costs. 

Benefits & Pensions

There are various sources of retirement income you should factor in to determine how much you’ll earn in retirement, including Social Security benefits and your pension: 

• Age you will claim Social Security benefits: You can begin collecting Social Security benefits at the age of 62. However, the longer you wait, the more your benefits will be worth. 
• Monthly pension payment: A pension is an employee benefit in which the employer makes contributions. It’s similar to a 401(k) in that it’s an employer-sponsored retirement plan. Not everyone has a pension, so if you don’t have one, you can leave this field blank. 

Tax-Advantaged Savings

Retirement savings accounts may be provided by your employer or require you to get one yourself. In any case, there are several tax advantages that allow you to either defer payments or pay now and be exempt from taxes in the future. 

• Type of account: Tax-advantaged retirement savings accounts allow you to either contribute pre-tax dollars to your account and defer taxes or contribute post-tax payments and avoid potentially higher taxes when you retire. Some common types of tax-advantaged savings accounts are 401(k) or IRAs with tax deferral benefits. 

Other Savings

Most people have additional savings accounts they use besides their retirement accounts. Once you retire, you can use any of your savings and investments as retirement income. 

• Accounts: Your accounts refer to any funds in your bank account that you’ll use as retirement income. 
• One-time investments: You can include one-time investments like stocks, bonds and certificates of deposit (CDs) as retirement income. You’ll just need to provide the investment amounts, rate of return and years until you invest. 

Your income is one of the most significant considerations for retirement. However, how much money you need for retirement varies from person to person. Our IRA monthly payout calculator and retirement calculator can help you determine how much you need based on various personal and financial information, including when you plan to retire and your retirement accounts. 

As a general rule of thumb, you should follow the 4% rule, which dictates that you should withdraw 4% from your retirement savings each year after retirement. For instance, if you have $1 million saved for retirement, you can have an annual salary of $40,000. By dividing that number by 12 and comparing it to your monthly debts, you can see how much money you have left over for everything from reinvesting it to going on trips. 

The best way to save for retirement is to start saving as early as possible and to tax advantage of tax-advantaged savings accounts like IRAs and 401(k)s, which allow you to contribute to your savings each year and grow them tax-deferred or tax-free, depending on the specific account. The best part is there’s no limit to the number of individual retirement accounts you can have, so you can have multiple IRAs. The only caveat is that you can only contribute up to the maximum amount across all your accounts. 

Other ways to save for retirement include high-yield savings accounts, stocks, bonds, EFTs, mutual funds and CDs. The earlier you start saving, the more you can earn in passive income over time since compound interest can grow your money. 

When you should retire depends on many factors, like your financial situation, retirement goals and health. To get your Social Security benefits, you can retire as early as 62 years old, but 67 is considered the full retirement age, so waiting can help you increase your benefit amount. Unfortunately, there’s no additional increase after you reach the age of 70, so we recommend retiring before then to take advantage of retirement.