401(k) Retirement Calculator

A common rule of thumb is to accumulate 25× your desired annual retirement income — derived from the 4% withdrawal rate rule. If you want $60,000 per year from your portfolio, you need roughly $1.5 million. However, this ignores Social Security, pension income, and other sources that reduce the amount you need to draw from your 401(k). Use this calculator to model all income sources together for a more accurate picture.

The 4% rule (Bengen, 1994) states that withdrawing 4% of your portfolio in the first year of retirement, then adjusting that amount for inflation each year, gives a high probability of your savings lasting 30 years across historical US market scenarios. More recent research suggests 3.3%–4.5% depending on time horizon, asset allocation, and fees. Use a lower rate (3–3.5%) if planning for 35–40 years, or a higher rate (4.5–5%) for shorter retirements.

Under the SECURE 2.0 Act, Required Minimum Distributions from traditional 401(k) accounts begin at age 73 (for those who turn 72 after December 31, 2022). Roth 401(k) accounts became exempt from RMDs as of 2024 — a significant advantage for wealth preservation and estate planning. The RMD amount each year is calculated by dividing your account balance by an IRS life expectancy factor from the Uniform Lifetime Table.

Social Security directly reduces how much you need to withdraw from your 401(k), which extends your portfolio's longevity. The key decision is when to claim. Claiming at 62 permanently reduces your benefit by up to 30% compared to your Full Retirement Age (67 for those born in 1960 or later). Delaying to 70 increases your benefit by 8% per year after FRA, for a maximum 24% increase. Most people in good health benefit from delaying at least to FRA, and often to 70.

Sequence-of-returns risk is the danger that poor investment returns early in retirement can permanently impair your portfolio, even if long-term average returns are acceptable. If your portfolio drops 30% in year one of retirement and you are withdrawing 4% of the original balance, you are now withdrawing a much higher percentage of the depleted balance. Strategies to mitigate this include holding a cash buffer (1–2 years of expenses), flexible spending rules, and delaying full retirement or large withdrawals during bear markets.

The Society of Actuaries reports that a 65-year-old US couple has roughly a 50% chance that at least one partner lives to age 90, and a 25% chance of one surviving to 95. Most financial planners recommend planning to at least age 90–92. Planning to a shorter age risks running out of money in your 80s when healthcare costs are highest and earning capacity is lowest. This calculator defaults to age 92 as a planning horizon.

A Roth conversion strategy involves paying taxes now on traditional 401(k) funds to avoid RMDs later and provide tax-free income in retirement. This makes sense when your current tax rate is lower than your expected retirement rate, when you have substantial assets that would generate large forced RMDs after 73, or when you want to leave a tax-free inheritance. The optimal conversion amount per year is often up to the top of your current tax bracket.

Inflation erodes purchasing power over a 20–30 year retirement. At 2.5% annual inflation, $6,000/month today buys only about $3,600/month of goods in 20 years. The 4% withdrawal rule accounts for this by increasing your withdrawal amount by inflation each year, which is why it depletes the portfolio faster than a fixed-withdrawal approach. Social Security benefits are adjusted for inflation via the COLA (Cost of Living Adjustment), making SS especially valuable as a hedge against late-retirement inflation.

During accumulation (working years), a 7% annual real return (after inflation) is commonly assumed for a diversified stock-heavy portfolio. During retirement (decumulation), most advisors recommend a more conservative portfolio (60% stocks / 40% bonds) and a lower return assumption of 4–6% annually. This calculator uses separate return assumptions for accumulation and retirement phases — adjust both based on your actual asset allocation.

Withdrawals from a traditional 401(k) before age 59½ are subject to a 10% early withdrawal penalty plus ordinary income tax. However, the Rule of 55 allows penalty-free withdrawals if you leave your employer in or after the year you turn 55. Substantially Equal Periodic Payments (SEPP / 72(t)) allow penalty-free withdrawals at any age if you take fixed equal payments for at least 5 years or until age 59½, whichever is later.