Calculators
Retirement Gap Calculator
This tool measures the distance between where your retirement savings are heading and where this method says they need to be. It subtracts the income you expect from Social Security or a pension, multiplies what is left by twenty-five, and compares that target with what your current savings and contributions are projected to reach. If there is a gap, it also shows how much more per year would close it. It is the method from our article Am I on track for retirement?, automated. Everything runs inside your browser, so your figures never leave your computer.
Your results
Target nest egg
$1,050,000
Projected at age 65
$835,620
Shortfall
$214,380
Short: on these assumptions you are projected to reach $835,620 by age 65, which is $214,380 less than the $1,050,000 this method points to.
Saving a further $5,229 a year, on top of the $10,000 you already put away, would close the gap over the next 20 years at the same growth rate.
How that was worked out
Your desired spending of $70,000 less $28,000 of guaranteed income leaves $42,000 a year that your savings have to cover. Multiplied by 25, the inverse of a 4 percent initial withdrawal rate, that gives a target of $1,050,000. Your current $110,000 is then compounded for 20 years at 7 percent, with each year’s $10,000 added at the end of the year so it earns nothing in the year it is made. This is the same method as the article, in the same order.
Five ways to close a gap
A shortfall is information, not an emergency, and it is usually closed by a combination of these rather than by any one of them. They are listed in rough order of how much control you have.
Save more
The most direct lever, and the one entirely within your control. The figure above tells you how much more per year would close the gap on its own.
Retire later
Working longer adds years of contributions, adds years of growth, and removes years the money has to cover. It moves three variables at once, which is why it is the strongest single lever for most people.
Spend less in retirement
Every dollar of annual spending you remove takes twenty-five dollars off the target. Reworking the desired spending figure above is often more revealing than reworking the savings rate.
Increase investment returns
The least controllable of the five. You can reduce fees and hold an allocation suited to your horizon, but you cannot decide what the market returns. Treat a higher growth rate here as a scenario to look at, not a plan to rely on.
Claim Social Security strategically
Delaying a claim past full retirement age raises the benefit permanently, which raises guaranteed income and lowers the target. The right timing depends on health, marital status and other income, so it is worth thinking about carefully.
If you would like more material like this, our free tools cover the same ground in more depth. The results above are never gated.
What this number does and does not tell you
The 4 percent rule behind the twenty-five times multiple is a rule of thumb, drawn from historical US stock and bond returns over thirty-year retirements. It described what would have worked in the past. It is not a guarantee, it was never intended as one, and reasonable people who have studied the same data argue for figures both above and below it depending on how long the money needs to last and what it is invested in.
A single average growth rate also hides something real. Markets do not return seven percent every year; they return a scatter of numbers that happen to average out over long stretches. The order those numbers arrive in matters, and it matters most in the few years either side of your retirement date, when the balance is at its largest and you have begun taking money out. That is sequence-of-returns risk, and no calculator that uses one steady rate can show it to you.
The Social Security figure deserves particular care. Rather than estimating it, sign in at ssa.gov and take the number from your own statement, which is based on your actual earnings record and shows how the benefit changes depending on when you claim. A guess here moves the target by twenty-five times the amount you guessed wrong by.
Treat all of this as a direction-of-travel check rather than a plan. It tells you whether your current course is roughly right, roughly short or comfortably ahead, and it tells you which lever moves the answer most. A plan would also account for taxes, inflation, healthcare, how your money is actually invested, and what you want the years to look like.
The full method, including how to think about the desired spending figure, is set out in Am I on track for retirement? This calculator does the same arithmetic, so the two should always agree. If you want to go further than a single set of assumptions, Retirement Navigator ($49) works through several scenarios, claiming ages and drawdown order in a spreadsheet you keep. The calculator on this page is complete on its own; the paid tool is for people who want to model more than one future.