Retirement Shortfall Calculator United States

What the retirement shortfall calculator does

The calculator compares the nest egg you will need to sustain your chosen income after you stop working with the amount you are projected to have saved by your target retirement age, based on what you hold now and what you keep adding. The difference is your shortfall, and where there is a gap the tool shows the extra monthly saving that would close it.

Enter your current age and retirement age, your current savings and monthly contribution, the annual income you want in retirement in today's dollars, and your assumed return, inflation and safe withdrawal rates. Every assumption is an input, so you can see how a higher saving rate, a longer working life or a more cautious return changes the result.

How the nest egg you need is calculated

The target depends on the income you want in retirement, entered in today's dollars, and the safe withdrawal rate, the share of your savings you plan to draw each year once retired.

The tool first grows your desired income by your inflation assumption across the years until you retire, giving the income you will need in your first year of retirement. It then divides that figure by your withdrawal rate. At a 4 percent withdrawal rate this is the same as multiplying the income need by 25; at 5 percent it becomes 20 times, and at 3 percent roughly 33 times. Small changes in the withdrawal rate move the target a lot, which is why you set it yourself.

How your projected savings are estimated

Your current balance grows at your expected annual return for every year until retirement. Your monthly contributions are treated as a stream of deposits that each grow until the same date, using the future value of an annuity. The two together give your projected nest egg.

A contribution made early has decades to grow, while one made close to retirement has only a few years, so starting sooner matters a great deal. Extending your horizon by a few years, or raising the monthly amount a little, can move the projected total substantially.

Reading your shortfall and the catch-up figure

If your projected savings fall short of the nest egg you need, the difference appears as your shortfall. The calculator then works out the additional monthly saving whose future value would exactly cover that gap over your remaining years.

If your projection exceeds the target, the tool reports a surplus and the extra monthly figure is zero. The "on track" percentage shows your projected savings as a share of what you need.

Lean cautious with the inputs. A lower return and higher inflation give a more conservative target that leaves room for disappointing markets, and running several scenarios shows the range of outcomes you might face.

Using the result to plan

If there is a shortfall, you can save more each month, which the catch-up figure measures directly. You can work a little longer, which gives your savings more time to compound and shortens the drawdown period. You can revisit the income you need in retirement, since a modestly lower target can shrink the required nest egg sharply. And you can review your investment mix, since the return assumption feeds straight into the projection.

Markets, contributions and plans change, so rerun the calculation each year and after any major life event, such as a pay rise, a house move, a change in family circumstances, or a shift in when you hope to stop working. Each of these can move both the target and the projection, and checking regularly catches a widening gap while there is still time to act.

This is general information only and not financial advice.

About This Retirement Shortfall Calculator

Use this retirement shortfall calculator to get an instant estimate based on the figures you enter. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.