Does this calculator account for taxes?

No. Withdrawals from tax-deferred accounts (401k, traditional IRA) are taxable as ordinary income, but this tool does not model that. To roughly approximate the after-tax impact, you can reduce your return rate or increase your spending target to account for expected taxes.

How does the multi-phase spending model work?

The tool defaults to three spending phases based on widely-used retirement research: an active phase at full spending (retirement to age 75), a slow-go phase at roughly 80% of peak spending (ages 75–85), and a late-retirement phase at 95% of peak spending (85+), where healthcare costs partially offset reduced discretionary spending. You can customize these phases or use a single flat spending amount.

How It Works — Retirement Modeler

Q: How accurate is this calculator?

The math is sound and cross-validated against Excel's PV() and PMT() functions. The bigger source of error is the assumptions themselves — fixed return rates, no tax modeling, and no inflation adjustment. Use it as a planning tool to understand the sensitivity of your plan to different inputs, not as a precise forecast.

How it works

Retirement Modeler runs a deterministic projection of your savings in two phases: accumulation (saving toward retirement) and drawdown (spending in retirement). It uses standard time-value-of-money formulas — the same math underlying Excel's PV() and PMT() functions.

Accumulation phase

During accumulation, the calculator uses a future value of ordinary annuity formula. Contributions are assumed to happen at the end of each month, then compound at your specified annual rate divided by 12. Given your current savings, target retirement balance, growth rate, and years until retirement, it solves for the monthly contribution needed to reach your goal.

Drawdown phase

At retirement, the tool calculates the nest egg required to sustain your spending using an annuity-due formula — withdrawals happen at the start of each month, with the remaining balance compounding for the rest of the month. It then runs a month-by-month simulation forward through your retirement to produce the year-by-year balance table shown in the results.

Multi-phase spending

Spending isn't flat in retirement. The tool defaults to three phases modeled on widely-used retirement research:

Active years (retirement to age 75) — full spending. Travel, hobbies, and discretionary expenses are typically highest early in retirement.
Slow-go years (ages 75–85) — roughly 80% of peak spending as activity naturally decreases.
Late retirement (85+) — roughly 95% of peak spending. Reduced leisure costs are partially offset by rising healthcare expenses.

You can customize these phases or use a single flat spending amount.

Other income sources

Social Security, pensions, rental income, and part-time work reduce how much your portfolio needs to cover each month. The tool subtracts your total monthly income from other sources from your spending target before calculating the required portfolio withdrawal.

What this tool doesn't model

Taxes. Withdrawals from tax-deferred accounts (401k, traditional IRA) are taxable as ordinary income. This tool does not model taxes on withdrawals, required minimum distributions (RMDs), or Roth conversions.
Inflation. Rates are nominal. If you want real (inflation-adjusted) projections, use a return rate net of expected inflation — for example, 4% instead of 7% if you assume 3% annual inflation.
Sequence-of-returns risk. The model assumes a fixed rate of return every year. In reality, a market downturn early in retirement can significantly shorten how long savings last, even if the long-run average return is fine.
Social Security optimization. You can input a Social Security amount, but the tool doesn't model claiming age trade-offs or spousal benefits.

Frequently asked questions

What rate of return should I use?

US large-cap equities have returned roughly 10% nominally over long periods, but a diversified portfolio is typically lower. 6–7% nominal is a common planning assumption. To build in an inflation adjustment, subtract your expected inflation rate — for example, use 4% if you assume 7% returns and 3% inflation.

What is the 4% rule?

A guideline from the 1994 Bengen study suggesting retirees can withdraw 4% of their portfolio annually (inflation-adjusted) with a high probability of not running out of money over a 30-year retirement. This tool doesn't enforce the 4% rule, but you can verify your plan against it by checking whether your annual spending is at or below 4% of your target retirement balance.

Why does my balance keep growing in retirement?

If your assumed return rate exceeds your effective withdrawal rate, the portfolio compounds faster than you spend it. This is mathematically correct but doesn't account for sequence-of-returns risk — a bad stretch of returns early in retirement can significantly shorten how long savings last even if the long-run average is fine.

How accurate is this calculator?

The math is sound and cross-validated against Excel's PV() and PMT() functions. The larger source of error is the assumptions themselves — fixed return rates, no taxes, no inflation modeling. Use it to understand the sensitivity of your plan to different inputs, not as a precise forecast.

Does this account for taxes?

No. To roughly approximate the after-tax impact, you can reduce your return rate or increase your spending target to account for expected taxes on withdrawals.

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