Question 1

How much do I need to retire?

Accepted Answer

A common rule of thumb is to save 25 times your expected annual expenses (the Rule of 25). For example, if you expect to spend $50,000 per year in retirement, you'd need $1.25 million saved. However, the exact amount depends on your lifestyle, healthcare needs, Social Security benefits, and other income sources. Our retirement calculator can help you determine your specific target.

Question 2

What is the Rule of 25?

Accepted Answer

The Rule of 25 states that you need to save 25 times your annual retirement expenses to retire comfortably. This rule is based on the 4% safe withdrawal rate—if you withdraw 4% of your portfolio annually, you need 25x that amount saved (because 4% × 25 = 100%). For example, if you need $40,000 per year, you'd target $1 million in savings.

Question 3

What rate of return should I assume for retirement planning?

Accepted Answer

Most financial planners recommend assuming a 6-7% annual return for long-term planning. The S&P 500 has historically returned about 10% annually, but after accounting for inflation (typically 2-3%), real returns are closer to 7%. Using a conservative estimate helps ensure you don't underestimate your savings needs.

Question 4

How does inflation affect my retirement savings?

Accepted Answer

Inflation erodes your purchasing power over time. If inflation averages 3% annually, something that costs $50,000 today will cost about $90,000 in 20 years. This is why your retirement savings need to grow faster than inflation. When planning, consider using 'real' returns (after inflation) or separately account for inflation in your expense projections.

Question 5

What's the difference between nominal and real returns?

Accepted Answer

Nominal returns are your investment gains before accounting for inflation. Real returns are what's left after subtracting inflation. For example, if your investments return 8% and inflation is 3%, your nominal return is 8% but your real return is only 5%. Real returns better reflect your actual purchasing power growth.

Question 6

When should I start saving for retirement?

Accepted Answer

As early as possible! Thanks to compound interest, money invested in your 20s has more time to grow than money invested in your 40s. Someone who invests $500/month from age 25 will have significantly more at 65 than someone who invests the same amount starting at 35. Even small amounts invested early can grow substantially.

Question 7

How do I calculate my retirement number?

Accepted Answer

To calculate your retirement number: 1) Estimate your annual expenses in retirement, 2) Subtract any guaranteed income (Social Security, pension), 3) Multiply the remaining amount by 25 (for a 4% withdrawal rate). For example: $60,000 expenses - $25,000 Social Security = $35,000 needed from savings. $35,000 × 25 = $875,000 target savings.

Question 8

What if I'm behind on retirement savings?

Accepted Answer

If you're behind, don't panic—there are strategies to catch up. Consider: 1) Maximizing catch-up contributions after age 50, 2) Reducing current expenses to save more, 3) Working a few extra years, 4) Downsizing housing, 5) Delaying Social Security to increase benefits. Even starting late, consistent saving and compound growth can make a significant difference.

Question 9

Should I pay off debt or save for retirement?

Accepted Answer

It depends on the interest rates. Generally: 1) Always contribute enough to get any employer 401(k) match first, 2) Pay off high-interest debt (credit cards, payday loans) before investing extra, 3) For low-interest debt (mortgage, student loans below 6-7%), you might invest while making minimum payments since market returns historically exceed these rates. Balance both when possible.

Question 10

How do I account for healthcare costs in retirement?

Accepted Answer

Healthcare is often the largest expense in retirement. Consider: 1) Medicare covers many costs starting at 65, but you'll still have premiums, deductibles, and gaps, 2) Fidelity estimates a 65-year-old couple needs about $315,000 saved just for healthcare, 3) HSAs are a great way to save tax-free for medical expenses, 4) If retiring before 65, budget for private insurance.

Question 11

What is a 401(k)?

Accepted Answer

A 401(k) is an employer-sponsored retirement savings plan that allows you to contribute pre-tax (traditional) or after-tax (Roth) money from your paycheck. Contributions grow tax-deferred (or tax-free for Roth), and many employers match a portion of your contributions. Named after section 401(k) of the tax code, it's the most common retirement plan in America.

Question 12

How much can I contribute to my 401(k)?

Accepted Answer

In 2026, the employee contribution limit is $23,500. If you're age 50 or older, you can contribute an additional $7,500 in catch-up contributions, for a total of $31,000. The combined limit for employee and employer contributions is $70,000 ($77,500 if 50+). These limits typically increase annually with inflation.

Question 13

What are catch-up contributions?

Accepted Answer

Catch-up contributions are additional amounts people age 50 and older can contribute to retirement accounts beyond the standard limits. For 401(k)s in 2026, the catch-up limit is $7,500 on top of the regular $23,500 limit. This allows older workers who may be behind on savings to accelerate their retirement contributions during their peak earning years.

Question 14

Should I choose Traditional or Roth 401(k)?

Accepted Answer

It depends on your current vs. expected future tax rate. Traditional 401(k): Pay taxes later—best if you expect to be in a lower tax bracket in retirement. Roth 401(k): Pay taxes now—best if you expect higher taxes in retirement or want tax-free withdrawals. Many people benefit from having both for tax diversification in retirement.

Question 15

What happens to my 401(k) if I change jobs?

Accepted Answer

You have several options: 1) Leave it with your former employer (if allowed), 2) Roll it over to your new employer's 401(k), 3) Roll it over to an IRA (often the best choice for more investment options), 4) Cash it out (not recommended—you'll pay taxes plus a 10% penalty if under 59½). Never leave retirement savings behind when changing jobs.

Question 16

When can I withdraw from my 401(k)?

Accepted Answer

Generally, you can withdraw without penalty at age 59½. Withdrawals before then typically incur a 10% early withdrawal penalty plus income taxes. Exceptions include: disability, certain medical expenses, substantially equal periodic payments, and the Rule of 55 (leaving your job at 55 or later). Traditional 401(k)s require minimum distributions starting at age 73.

Question 17

What is an employer match?

Accepted Answer

An employer match is free money your company contributes to your 401(k) based on your own contributions. Common formulas include matching 50% of contributions up to 6% of salary, or dollar-for-dollar up to 3%. Always contribute at least enough to get the full match—otherwise, you're leaving free money on the table. A 50% match is an instant 50% return!

Question 18

What are 401(k) fees and why do they matter?

Accepted Answer

401(k) fees include plan administration fees and investment expense ratios. Fees of 1% annually might seem small, but over 30 years they can reduce your balance by 25% or more compared to low-fee options. Review your plan's fee disclosure document, choose low-cost index funds when available, and advocate for better options if fees are high.

Question 19

What is an IRA?

Accepted Answer

An IRA (Individual Retirement Account) is a personal retirement savings account you open yourself through a bank, brokerage, or financial institution. Unlike 401(k)s, IRAs aren't tied to an employer, giving you more flexibility and typically many more investment options. The two main types are Traditional IRAs (tax-deductible contributions) and Roth IRAs (tax-free withdrawals).

Question 20

What's the difference between Traditional and Roth IRA?

Accepted Answer

Traditional IRA: Contributions may be tax-deductible, money grows tax-deferred, and withdrawals in retirement are taxed as income. Roth IRA: Contributions are made with after-tax dollars (no deduction), money grows tax-free, and qualified withdrawals are completely tax-free. Roth also has no required minimum distributions during the owner's lifetime.

Question 21

Can I have both a 401(k) and IRA?

Accepted Answer

Yes! You can contribute to both a 401(k) and an IRA in the same year. The contribution limits are separate. However, your ability to deduct Traditional IRA contributions may be limited if you (or your spouse) have a workplace retirement plan and your income exceeds certain thresholds. Roth IRA contributions have their own income limits.

Question 22

What are IRA contribution limits?

Accepted Answer

In 2026, you can contribute up to $7,000 to IRAs ($8,000 if age 50+). This limit is combined across all your Traditional and Roth IRAs—you can't contribute $7,000 to each. You must have earned income (wages, self-employment) at least equal to your contribution. A spousal IRA allows non-working spouses to contribute based on the working spouse's income.

Question 23

What is a backdoor Roth IRA?

Accepted Answer

A backdoor Roth IRA is a legal strategy for high-income earners who exceed Roth IRA income limits. You contribute to a Traditional IRA (no income limit for non-deductible contributions), then convert it to a Roth IRA. The conversion is taxable on any pre-tax amounts, but once in the Roth, future growth is tax-free. Consult a tax advisor about the pro-rata rule.

Question 24

When can I withdraw from my IRA?

Accepted Answer

You can withdraw from IRAs at any time, but there are implications. Before age 59½, you'll typically owe income taxes plus a 10% penalty on Traditional IRA withdrawals. Roth IRA contributions (not earnings) can be withdrawn anytime tax and penalty-free. After 59½, Traditional IRA withdrawals are taxed as income; qualified Roth withdrawals are tax-free.

Question 25

What are the income limits for Roth IRA?

Accepted Answer

In 2026, single filers can contribute the full amount if their modified AGI is below $146,000, with a phase-out until $161,000. Married filing jointly, the phase-out is $230,000-$240,000. Above these limits, you cannot contribute directly but may use the backdoor Roth IRA strategy. These limits typically increase annually with inflation.

Question 26

Should I convert my Traditional IRA to Roth?

Accepted Answer

A Roth conversion makes sense when: 1) You're in a lower tax bracket now than you expect in retirement, 2) You have money outside the IRA to pay the conversion taxes, 3) You want to avoid RMDs, 4) You want to leave tax-free money to heirs. Consider converting gradually over several years to manage the tax hit and avoid jumping brackets.

Question 27

When can I start collecting Social Security?

Accepted Answer

You can start collecting Social Security retirement benefits as early as age 62, but your benefit will be permanently reduced (by about 6-7% per year before your full retirement age). Full retirement age is 67 for those born in 1960 or later. You can delay benefits until age 70 to receive delayed retirement credits (8% increase per year after full retirement age).

Question 28

How much will I get from Social Security?

Accepted Answer

Your benefit is based on your 35 highest-earning years, adjusted for inflation. The average retirement benefit in 2026 is about $1,900/month, but individual amounts vary widely from under $1,000 to over $4,000. Create an account at ssa.gov to see your personalized estimate based on your actual earnings history.

Question 29

Should I take Social Security early?

Accepted Answer

Taking benefits at 62 instead of 67 means a permanent 30% reduction. However, early claiming might make sense if: you need the income, you have a shorter life expectancy, or you can invest the benefits. Delaying to 70 increases benefits by 24% over full retirement age. For married couples, coordinating claiming strategies can maximize lifetime household benefits.

Question 30

What is full retirement age?

Accepted Answer

Full retirement age (FRA) is when you can receive 100% of your earned Social Security benefit. For people born in 1960 or later, FRA is 67. For those born between 1943-1954, it's 66. There's a gradual increase for birth years 1955-1959. Claiming before FRA reduces benefits; delaying past FRA until 70 increases them.

Question 31

Can I work while collecting Social Security?

Accepted Answer

Yes, but if you're under full retirement age, earnings above certain limits reduce your benefit temporarily. In 2026, the earnings limit is about $22,320 ($1 withheld for every $2 over). In the year you reach FRA, the limit is higher and the reduction is $1 for every $3 over. After FRA, there's no reduction regardless of earnings, and withheld benefits are recalculated.

Question 32

How are Social Security benefits taxed?

Accepted Answer

Up to 85% of your Social Security benefits may be taxable depending on your 'combined income' (AGI + nontaxable interest + half your SS benefits). Single filers: Below $25,000 = no tax; $25,000-$34,000 = up to 50% taxable; above $34,000 = up to 85% taxable. Married filing jointly: thresholds are $32,000 and $44,000. Many retirees pay federal taxes on their benefits.

Question 33

What is the 4% rule?

Accepted Answer

The 4% rule suggests you can withdraw 4% of your retirement portfolio in the first year of retirement, then adjust that amount for inflation each year, with a high probability of not running out of money over 30 years. It's based on the 1994 Trinity Study. For example, with $1 million saved, you'd withdraw $40,000 the first year. It's a guideline, not a guarantee.

Question 34

Is the 4% rule still valid?

Accepted Answer

The 4% rule remains a useful starting point, but some experts suggest adjusting it based on current conditions. With lower expected returns and longer lifespans, some recommend 3-3.5% for more safety. Others use dynamic strategies, reducing withdrawals in down markets. The key insight—that you need roughly 25x your annual spending—remains valid.

Question 35

What is the bucket strategy?

Accepted Answer

The bucket strategy divides your retirement savings into three 'buckets': 1) Short-term (1-2 years expenses in cash/stable funds for current needs), 2) Medium-term (3-7 years in bonds/balanced funds), 3) Long-term (remaining funds in stocks for growth). This lets you avoid selling stocks in a down market while ensuring you have accessible funds for immediate needs.

Question 36

What are RMDs and when do they start?

Accepted Answer

Required Minimum Distributions (RMDs) are mandatory withdrawals from Traditional IRAs, 401(k)s, and similar accounts. They begin at age 73 (as of the SECURE 2.0 Act). The amount is calculated by dividing your account balance by an IRS life expectancy factor. Roth IRAs don't have RMDs during the owner's lifetime. Failing to take RMDs results in a 25% penalty.

Question 37

How do I minimize taxes in retirement?

Accepted Answer

Strategies include: 1) Tax-efficient withdrawal ordering (taxable accounts first, then tax-deferred, then Roth), 2) Roth conversions in low-income years, 3) Tax-gain harvesting in the 0% capital gains bracket, 4) Qualified Charitable Distributions from IRAs if charitably inclined, 5) Managing income to stay in lower brackets. Having both traditional and Roth accounts provides flexibility.

Question 38

How accurate is this calculator?

Accepted Answer

Our calculator provides estimates based on the inputs you provide and mathematical projections. Actual results will vary due to market fluctuations, changing tax laws, inflation, and personal circumstances. We use standard financial formulas and reasonable default assumptions. Use the results as a planning tool and starting point, not a guarantee.

Question 39

What assumptions does the calculator use?

Accepted Answer

Our calculator assumes: 1) Monthly compounding of returns, 2) Contributions made at month-end, 3) Constant return rate (markets actually fluctuate), 4) 4% default withdrawal rate based on the Trinity Study, 5) Returns are pre-tax. You can adjust the expected return, inflation, and withdrawal rate to see different scenarios.

Question 40

Why does my result change with different inputs?

Accepted Answer

Small changes in inputs can significantly affect results due to compound growth. A 1% higher return rate, an extra $100/month contribution, or 5 more years of saving can each add tens or hundreds of thousands to your final balance. This sensitivity highlights why it's important to: start early, contribute consistently, and keep fees low.

Question 41

Can I save or export my results?

Accepted Answer

Yes! Our calculator allows you to export your results to PDF or Excel format. Click the export buttons below the results to download a detailed summary including your inputs, projected balance, year-by-year breakdown, and charts. This is helpful for sharing with a financial advisor or tracking your planning over time.

Question 42

How often is the calculator updated?

Accepted Answer

We regularly update our calculators to reflect the latest contribution limits, tax brackets, and best practices. Contribution limits typically change annually—we update these as soon as the IRS announces new figures. Our calculation methodology is based on established financial principles that remain consistent.

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