How Our Retirement Calculator Works

Calculation Methodology

1. Time Periods

We calculate the number of months from your current age to your life expectancy, considering your retirement age and Social Security income age.

2. Savings and Investments Growth

We use compound interest formulas to calculate the growth of your savings, investments, and 401(k) balance over time, taking into account your monthly contributions and expected rates of return.

3. Inflation Adjustment

We adjust your monthly expenses for inflation each year to ensure a more accurate representation of future costs.

4. Social Security Income

Once you reach your specified Social Security income age, we include this amount in your monthly income calculations.

5. 401(k) Withdrawals

Starting from your specified 401(k) withdrawal age, we include your monthly 401(k) withdrawals in the calculations, adjusting your 401(k) balance accordingly.

6. Monthly Balance Updates

For each month, we:

• Add investment returns and contributions to your savings and investment balances
• Subtract your inflation-adjusted monthly expenses
• Add Social Security income (if applicable)
• Add 401(k) withdrawals and adjust the 401(k) balance (if applicable)

7. Feasibility Check

We determine if your retirement plan is feasible by checking if your total balance remains positive throughout your expected lifetime.

8. Final Balance

We calculate your final balance at the end of your expected lifetime, which helps you understand if your current plan may leave an inheritance or if adjustments are needed.