How Retirement Planning Works
Retirement planning answers one core question: will my savings last as long as I need them to? The answer depends on three compounding factors — how much you accumulate before you retire, how much you spend each year in retirement, and how long those withdrawals need to last.
This calculator models both phases separately. The accumulation phase compounds your current savings plus annual contributions at your expected return. The drawdown phase then depletes that balance by your desired annual income, adjusted each year for inflation, while the remaining balance continues to earn investment returns.
The Five Scenarios Explained
| Scenario | Return | Inflation | Profile |
|---|---|---|---|
| Conservative | 4% | 3% | Bonds, low-volatility funds, capital preservation |
| Moderate | 6% | 2.5% | Balanced 60/40 portfolio, standard planning baseline |
| Aggressive | 8% | 2% | Equity-heavy portfolio for long time horizons |
| Custom | Yours | Yours | Enter your own return and inflation assumptions |
| Longevity | 5% | 3.5% | Stress-test: live to 95, higher inflation, modest returns |
The 4% Rule and Safe Withdrawal Rates
The 4% rule is a widely cited guideline suggesting that retirees can withdraw 4% of their portfolio in the first year of retirement, then adjust that amount for inflation each year, with a high probability the portfolio survives 30 years. It originates from the Trinity Study (1998) based on US stock and bond market data.
This calculator computes your required nest egg using your exact income target and inflation rate, giving you a personalised target rather than relying on the 4% rule as a rough proxy. The result is shown in the Required Savings hero card.
Frequently Asked Questions
balance = (balance + contribution) × (1 + return). This repeats for every year until you reach retirement age.People Also Search For
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