Retirement Calculator FAQ
Clear answers about savings targets, the 4% rule, account types, and retirement timing.
Read these answers first if you want more context behind retirement projections and savings assumptions.
Retirement estimates depend on savings rate, timing, and withdrawals.
Tax treatment matters across account types.
A rough target is useful even when the future is uncertain.
Most common questions
How much should I save for retirement?
Common guidance suggests 10-15% of gross income minimum, including employer match. Age-based targets: 1x salary by 30, 3x by 40, 6x by 50, 8x by 60, 10x by 67. Starting with employer match, then increasing 1% annually until reaching 15%+. High earners may need 20%+ due to Social Security caps.
What's the difference between 401(k) and IRA?
401(k): Employer-sponsored, $23,000 limit (2024), potential matching, limited investment options, loans available. IRA: Individual account, $7,000 limit (2024), more investment choices, no loans. Use both: get full employer match first, then max IRA, then return to 401(k).
Roth vs Traditional: What's the difference?
Traditional: Tax deduction now, pay taxes in retirement. May benefit those in high tax bracket now expecting lower bracket in retirement. Roth: No deduction now, tax-free in retirement. May benefit those who are young, in low bracket now, or expect higher taxes later. Many use both for tax diversification.
What's the 4% withdrawal rule?
Withdraw 4% of retirement savings annually to make money last 30 years. Example: $1 million portfolio = $40,000/year. Based on historical market returns. Conservative approach uses 3-3.5%. Adjust based on market conditions, expenses, and other income sources like Social Security.
When can I access my retirement money?
401(k)/IRA: Age 59.5 without penalty (some exceptions exist). Social Security: Age 62 (reduced benefits) to 70 (maximum benefits). Full retirement age: 66-67 depending on birth year. Early retirement possible but requires careful planning and potentially higher savings rates.
Catching up on retirement savings - what are the options?
Strategies include: 1) Maximize catch-up contributions (50+: extra $7,500 401k, $1,000 IRA), 2) Delay retirement 2-3 years, 3) Reduce expenses, 4) Consider part-time work in retirement, 5) Downsize housing. Even starting late, compound growth can still build significant wealth.
Paying off mortgage before retirement - pros and cons?
Pros: Predictable interest savings close to your mortgage rate, peace of mind, lower retirement expenses. Cons: Lose tax deduction, opportunity cost if investments return more than mortgage rate. May be beneficial if mortgage rate >4-5% or you're risk-averse.
How does Social Security fit into retirement planning?
Social Security replaces ~40% of pre-retirement income for average earners. Claiming strategies: Age 62 (75% of full benefit), Full retirement age (100%), Age 70 (132%). Delaying increases benefits 8%/year. Check your Social Security statement annually at ssa.gov for benefit estimates.
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