How this is calculated
retirement number = yearly spending × 25 (the 4% rule); timeline: compound monthly until savings ≥ target
The 4% rule comes from the 'Trinity study' line of research: a portfolio of stocks and bonds has historically survived 30+ year retirements when the retiree withdrew 4% of the starting balance in year one and adjusted that amount for inflation each year after. Flip the 4% around and you get the planning shortcut this tool uses: you need roughly 25 times your annual spending.
Notice that the target depends on spending, not income. Someone earning $200K but spending $50K needs the same nest egg as someone earning $60K and spending $50K — this is why the savings rate, not the salary, decides when work becomes optional.
The timeline projection compounds your current savings and monthly contributions at your chosen return until they cross the target. It's the same month-by-month simulation as our millionaire calculator, just pointed at a personalized goal. Treat the result as a planning compass, not a guarantee — sequence-of-returns risk, healthcare costs and pension income all shift the real picture.
Frequently asked questions
Is the 4% rule still valid?
It remains the standard planning baseline, with active debate around the edges — some researchers suggest 3.5% for very long retirements, others argue flexibility in bad years makes 4%+ fine. Using 25× spending puts you in the right neighborhood; precision beyond that is false comfort.
Does the target account for Social Security or pensions?
Not directly — subtract expected pension income from your yearly spending first. If you'll spend $40,000 and expect $15,000 from a pension, your portfolio only needs to cover $25,000 → a $625,000 target.
Before or after tax?
Think of spending as after-tax and the portfolio as pre-tax if it's in traditional retirement accounts — meaning the real target is somewhat higher. Roth-style accounts bring the two closer together. This is where a real planner earns their fee.
What return should I assume?
A diversified retirement portfolio is usually modeled at 5-7% nominal. Using a real (inflation-adjusted) return of ~4-5% keeps the whole calculation in today's dollars, which is easier to reason about.