Retirement Savings Calculator

This handy calculator lets you work out the length of time your retirement savings will last after you've lost your income from employment.

Retirement Savings Calculator

Your retirement savings will last

How long can I expect my retirement savings to last?

If you've saved up money for your retirement, you can work out how long this will last you. How many years your nest egg will last you depends on a number of factors, including the size of your accumulated savings, interest rates, how much you spend, and how much you have coming in in pensions, Social Security, and other forms of income. You can calculate this either using the handy retirement savings calculator or by applying the formula set out below.

To work out how many years your savings will last when you are retired, you must calculate a value for each of four variables, these being P (the size of your savings), E, your outgoings each month, I, your income each month, and R, the annual interest rate. In the formula below, R should be expressed as a decimal, e.g., 5% = 0.05.

Using these figures, you can calculate N, showing how many months you can support yourself with your savings:

N = [ log(12*E – 12*I) – log(12*E – 12*I – P*R) ] / log(1 + R/12)

Either the "log" or "ln" function on your calculator can be used for this, provided you use the same function for all three terms where "log" is written (log represents logarithm in base 10, ln represents logarithm in base e = 2.71828182845904...). Of course, if your income each month is higher than your expenses, you will be in net profit and wouldn't need to touch your nest egg, so you don't need the formula to tell you that you will enjoy a financially solvent retirement for the rest of your life.

Use the formula below if the interest rate is equal to 0:

N = P / (E – I)

Example calculation

Let's resume that you have saved up $100,000 for your retirement, and it earns an annual interest rate of 3%. If your monthly income is $2000, and your outgoings are $3000, then P = 100,000, R = 0.03, E = 3000, and I = 2000. To work out the number of months your savings will last you, we make the following calculation:

N = [ log(36000 – 24000) – log(36000 – 24000 – 3000) ] / log(1 + 0.0025)

= 0.28768 / 0.002497

= 115.21 months, or 9 years and 7 months.

On this calculation, you can see that you will no longer have any savings in less than 10 years following retirement. If you want your savings to last longer than this, you either need to save up a larger nest egg or find ways of cutting down your monthly outgoings.

You may also be interested in our Certificate of Deposit Calculator or Money Market Account Calculator

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