Planning a Retirement Nest Egg
Retirement needs are driven by spending, not by a magic balance. This calculator estimates the amount your portfolio may need at retirement after accounting for your current income, expected raises, inflation, other retirement income, investment return, and the number of years you want the money to last.
Use the percentage target when you want retirement spending to track your final working income. A 75% target means the first year’s retirement income is based on 75% of your projected income at retirement. Use the dollar target when you already have a specific annual budget in mind. That amount is entered in today’s dollars and inflated to retirement.
The result is a planning estimate based on constant average rates. It does not model taxes, fees, changing returns, healthcare shocks, Social Security claiming choices, or portfolio risk. Try conservative and optimistic assumptions rather than treating one output as a promise.
How to Calculate the Retirement Nest Egg
Step One: Project income at retirement
Grow current income by the assumed annual income increase for each year until retirement.
projected final income = currentIncome × (1 + incomeGrowth / 100)^(retirementAge - currentAge)
$70,000 × 1.03^32 = $180,611
Step Two: Set the first retirement income target
The percentage mode applies the chosen share to projected final income. The dollar mode inflates today’s annual target.
percent target = projected final income × retirementIncomePercent / 100
$180,611 × 75% = $135,458 per year
dollar target = retirementIncomeDollars × (1 + inflation / 100)^(retirementAge - currentAge)
$52,500 × 1.03^32 = $135,458 per year
Step Three: Subtract other retirement income
Convert monthly outside income into annual income and grow it to the retirement date.
portfolio income needed = target income - otherIncome × 12 × (1 + inflation / 100)^years
$135,458 - $0 = $135,458 per year
Step Four: Find the required nest egg
Discount the inflation-growing retirement withdrawals back to the retirement date using the growing-annuity present-value formula.
nest egg = first portfolio withdrawal × (1 - ((1 + inflation) / (1 + return))^retirement years) / (1 - ((1 + inflation) / (1 + return)))
$135,458 × (1 - (1.03 / 1.06)^18) / (1 - (1.03 / 1.06)) = $1,939,747
This assumes withdrawals rise with inflation and continue through the selected life expectancy.