From income needs to an illustrative target
The model subtracts other income from desired income and floors the result at zero. It increases that gap by the entered inflation rate until retirement, then divides the first-year gap by the chosen withdrawal-rate percentage. This produces an illustrative portfolio target.
It separately grows existing investments with monthly compounding and calculates the level month-end contribution required to close the target gap. The result is zero when projected existing savings already exceed the illustrative target.
A simple target example
Suppose desired annual income is 40,000 in today’s money and other income is 10,000, with one year until retirement and a 0% inflation assumption. The gap is 30,000. Dividing by an assumed 4% withdrawal rate gives a target of 750,000. That arithmetic does not show that 4% will be sustainable.
With retirement farther away, inflation changes the future income gap. Raising the assumed return can reduce the calculated saving amount, but it does not make the stronger return more likely. Test lower-return and higher-inflation cases before treating one result as a plan.
What this retirement model cannot decide
The tool does not determine a safe withdrawal rate, model market sequence risk, calculate tax or estimate government benefits. Other income is treated as a present-value amount growing at the same inflation assumption as spending, which may not match an actual pension’s indexation.
Longevity, health expenses, household changes, account access rules and estate goals are outside the calculation. Pre-retirement returns are constant; actual investments can fall just before retirement. Review the result with real benefit statements, account details and an appropriate retirement-planning process.
Questions readers often ask
Does a 4% input guarantee retirement income?
No. The withdrawal rate is your assumption, not a sustainability guarantee.
Does this calculate CPP, Social Security or pension benefits?
No. Enter your own verified other-income assumption.
Are taxes included?
No. Express your income assumptions consistently and account for relevant taxes separately.
Why can required monthly saving be zero?
Under the entered assumptions, projected existing investments already cover the calculated target. Changing assumptions may change that result.
Keep the result in context
The calculator uses simplified assumptions. It does not retrieve market prices, personalized tax rates or lender terms. Verify important inputs and revisit the estimate when circumstances change.
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Further reading: Investor.gov financial planning tools.