Retirement Income Calculator

What does a retirement income calculator work out?

A retirement income calculator adds up every monthly source you will have once you stop working — Social Security, a pension, other income and a systematic draw from savings — and reports the total before tax, an after-tax figure, the share of your old salary it replaces, and the surplus or shortfall against the budget you want.

It then projects the same sources year by year to show whether the savings last the horizon. At the defaults — $500,000 of savings drawn at 4%, $2,200 of Social Security, a $1,000 pension and $500 of other income — the paycheck is $5,367 a month before tax ($64,400 a year), 75.8% of an $85,000 salary. $12,120 of the $26,400 of Social Security is taxable, so a 15% flat rate takes $7,518 a year and leaves $4,740 a month, $60 short of a $4,800 budget. Savings still hold $467,249 after 25 years.

How much income will I have in retirement?

Traditional planning called it the three-legged stool: Social Security, an employer pension and personal savings. Today most of the weight sits on the savings leg — 401(k)s and IRAs — which means you decide how to turn a balance into monthly cash.

A workable plan covers essential spending (housing, food, Medicare premiums) with sources that cannot run out, and funds discretionary spending from the portfolio.

The guaranteed-floor tile shows how much of the paycheck comes from Social Security and the pension — 60% at the defaults. The higher that share, the less a bad market year early in retirement forces you to sell at the wrong time. Other income from part-time work is treated as rising with inflation; a pension is held flat, because most private pensions carry no cost-of-living increase.

What is a good income replacement ratio?

The Department of Labor's retirement guide ("Top 10 Ways to Prepare for Retirement") puts the need at 70–90% of pre-retirement income. You need less than 100% because payroll tax stops (7.65% of wages), retirement contributions stop, and commuting and work costs disappear.

A paid-off home can mean less; retiring before Medicare at 65 or planning heavy travel can mean more in the early years. The ratio on this page is gross annual retirement income divided by the salary you enter. A concrete monthly budget is the better test, which is why the surplus-or-shortfall line compares the after-tax paycheck with the after-tax budget you set.

Will my savings last through retirement?

The draw follows Bengen's method: the first year takes the withdrawal rate times the starting balance — 4% of $500,000 is $20,000 — and each later year takes that dollar amount raised with inflation. Historically a 4% start on a balanced portfolio lasted 30 years in almost every period (Bengen, 1994); a longer retirement argues for a lower starting rate.

The projection grows the balance at the return you set and then takes the draw at the end of each year. The "savings last" tile reports the first year the balance cannot cover the draw: at the defaults the money lasts the full 25 years with $467,249 left; at a 6% draw it runs out in year 23. Markets do not deliver a constant return, so a run of bad early years can exhaust a portfolio the average says should survive.

Is Social Security taxable in retirement?

Up to 85% of Social Security can be taxable under IRC §86, tested on "provisional income": your other income plus half of the benefits. For a joint return nothing is taxable up to $32,000, up to 50% between $32,000 and $44,000, and up to 85% above $44,000; single filers use $25,000 and $34,000.

These amounts were set in 1983 and 1993 and are not indexed, so ordinary IRA withdrawals push most retirees into them. A married person filing separately who lived with the spouse at any time in the year has base amounts of $0: up to 85% is taxable from the first dollar. This page runs the Pub 915 worksheet: at the defaults provisional income is $38,000 + $13,200 = $51,200, so taxable benefits are the lesser of 85% × $26,400 = $22,440 and 85% × ($51,200 − $44,000) + $6,000 = $12,120. The flat tax rate is applied to pension, other income, the draw and that taxable share — not to all of Social Security. Brackets, deductions, state rules and the temporary senior deduction are not modelled; the income tax calculator on this site handles the federal brackets.

This calculator gives an estimate under the assumptions you enter; the Social Security figure should come from your SSA statement and the pension from your plan administrator. It is not financial, tax or investment advice, and it does not recommend a claiming age or a withdrawal rate.