Two phases, two very different questions
Retirement planning is really two calculations stitched together, and most tools only show you the first.
Accumulation runs from today until the day you stop working. Your balance grows from contributions and returns, and the formula is the standard future value of a lump sum plus a monthly stream:
Drawdown starts the day after. Now the balance is being spent while whatever is left keeps earning. That is the phase that decides whether the plan works, and it is the one that gets skipped — a large number at 65 tells you nothing until you know what it buys and for how long.
Why everything is shown in today's money
A projected nest egg of 800,000 in thirty years sounds like a lot. At 2.5% inflation it buys what about 380,000 buys today — comfortable, but a different picture entirely. Presenting the big nominal number without that translation is the single most misleading thing a retirement calculator can do.
So this one converts everything back: the balance you see on the chart, in the table, and the monthly income figure, are all expressed at today's prices. The drawdown assumes your spending rises with inflation, which is what actually happens.
The 4% rule, and what it really claims
The "safe monthly income" figure comes from the 4% rule: withdraw 4% of your balance in year one, then raise that amount with inflation each year afterwards. It comes from research on historical US market returns, and it was designed to survive a 30-year retirement including the worst starting years on record.
Useful, but know its limits. It assumes a portfolio with a substantial stock allocation, it is based on one country's history, and it says nothing about a retirement lasting 40 years. Treat 4% as a sanity check, not a guarantee — and note that the drawdown projection above is separate from it, using your own return and inflation assumptions instead.
Include your employer match. If your employer puts in 4% when you put in 4%, the monthly contribution to enter is both halves. It is the highest-return money in your entire plan — an instant 100% on the matched portion — and leaving it out understates your projection badly.
What to do if the number is short
It usually is at first. In rough order of how much difference they make:
- Work two more years. Absurdly effective, because it does three things at once: two more years of contributions, two more years of growth, and two fewer years of spending.
- Raise the contribution. Not by a lot — increase it by one percent of salary each time you get a raise and you will never feel it go.
- Lower the income target. Many costs disappear with work: commuting, the mortgage if it is paid off, the savings themselves. Retirement spending is often 70–80% of pre-retirement spending.
- Check your fees. A fund charging 1% a year instead of 0.1% quietly consumes a large share of a lifetime's growth. This one is free money and takes an afternoon.
Starting earlier beats all of them, and it is the only lever you cannot get back. Run the compound interest calculator to see what a ten-year head start is worth.