Retirement Income Calculator

Most American retirements are funded by three sources: Social Security, employer plans and personal savings, and any pension or annuity income. Social Security replaces roughly 40% of pre-retirement earnings for a median worker and considerably less for higher earners, because the benefit formula is deliberately progressive.

The planning gap is the difference between what those three produce and what you actually intend to spend. Calculating that gap in monthly terms — rather than as a lump-sum "number" — is usually more actionable, because it is the figure your budget speaks in.

The old rule of thumb is 70–80% of pre-retirement income, on the logic that commuting, payroll taxes and retirement contributions all stop. It is a starting point, not an answer.

Some costs fall — mortgage payments often end, work costs disappear. Others rise: healthcare before Medicare eligibility is expensive, and early retirement typically increases travel and leisure spending. Build the number from your own spending categories rather than a percentage, and split it into essential and discretionary so you know which part must be covered by guaranteed income.

Claiming at 62 permanently reduces the monthly benefit by up to about 30% relative to full retirement age; delaying past full retirement age increases it by roughly 8% a year until 70. Those adjustments are broadly actuarially fair for an average lifespan, so there is no universally correct answer.

What tilts it: delaying is effectively longevity insurance and raises the survivor benefit for a spouse, which makes it attractive for the higher earner in a couple. Claiming early can make sense with poor health, no survivor to protect, or a need to avoid drawing down a portfolio during a market crash.

Medicare begins at 65. Retiring before that means buying coverage on the ACA marketplace, through COBRA, or via a spouse's employer plan, and marketplace premiums for a couple in their early sixties can run well into four figures a month before subsidies.

Marketplace subsidies are based on modified adjusted gross income, which retirees have unusual control over — a year funded largely from taxable-account principal and Roth withdrawals can show low income and attract a large subsidy. That interaction is one of the highest-value planning levers available in early retirement.

At 3% inflation, prices roughly double in 24 years. A retirement that begins at 62 may need to fund spending into the nineties, so purchasing power — not nominal balance — is the thing to protect.

Social Security is inflation-indexed, which is valuable and rare. Most private pensions are not. That argues for keeping a meaningful equity allocation well into retirement rather than moving entirely to cash and bonds: the risk of running out of money slowly is at least as real as the risk of a bad year early.