What has to come out of savings?
Social Security and a pension arrive whether or not markets cooperate. Everything above that has to come out of your own money. This works out how much that is, and how large a portfolio supports it.
- Income you want$0
- Social Security$0
- Pension$0
- Other dependable income$0
- Monthly gap$0
- Annual gap$0
- Portfolio that supports it$0
No investment return is assumed anywhere in this tool. It does not project what your savings will grow to, because nobody can. It answers a narrower and more useful question: at the withdrawal rate you chose, how large does the portfolio need to be on day one of retirement.
A number is not a plan.
Knowing the target is the easy half. The harder half is which accounts the money comes from and in what order, because withdrawal sequencing and the tax treatment of each account change how long the same portfolio lasts. We build that in eMoney, and the first conversation is complimentary.
Assumptions and limits. The income target is inflated from today's dollars to the first year of retirement at the rate you enter, compounded annually. Social Security, pension and other income are treated as entered and are not separately inflated, which is conservative for Social Security (it receives cost-of-living adjustments) and often realistic for a fixed pension (many do not). The portfolio figure is the first-year gap divided by the withdrawal rate you choose; it is arithmetic, not a projection, and it does not model investment returns, sequence-of-returns risk, market volatility, taxes on withdrawals, required minimum distributions, Medicare premiums, long-term care costs, or spending that changes through retirement. A withdrawal rate that worked historically is not a guarantee. This tool is general education, not advice, and it is not a recommendation of any withdrawal rate or investment. A complete plan requires a full review of your circumstances.