Quick and Simple Retirement Calculator

Question: How much money will you need in your retirement nest egg to ensure that you never run out of money during retirement?

Answer: Your annual dollar withdrawal should equal the amount of money you add to the nest egg from interest, dividend payments and capital gains. If the dollar amount added each year is equal to or exceeds the amount that you withdraw, your principal will never fall. And it could increase.

The following simple formula computes the dollar amount that you must accumulate to ensure a stable nest egg:

Nest Egg Dollar Amount = Annual Dollar Withdrawal / Rate of Return on Nest Egg After You Retire

The next table gives examples of nest egg dollar amounts.

Required Nest Egg Dollar Amount
Annual Withdrawal
Return	$20,000	$40,000	$60,000
4%	$500,000	$1,000,000	$1,500,000
6%	$333,333	$666,667	$1,000,000
8%	$250,000	$500,000	$750,000

For example, for a four percent return on your nest egg you would need to accumulate $1,500,000 to withdrawal $60,000 forever without reducing the value of the nest egg.

Obviously the more you withdraw each year the larger the required nest egg must be. But if you are able to realize higher returns on your investments, you will need a smaller nest egg. Be careful not to assume a rate of return that is too high because if you do not achieve it consistently, you will not have accumulated enough money.

For more information about retirement calculations see Retirement Calculator - Three Easy Steps and Free Investment Calculators.

Updated December 17, 2007.