How much you need to retire

A retirement projection is really two calculations chained together: how much you manage to build up until you stop working, and how long that capital lasts while you draw it down. This tool does both and tells you at what age it would run out — or whether it runs out at all.

The two phases: building up and drawing down

During accumulation you contribute every month and the capital grows. At retirement the drawdown begins: you stop contributing, take out a fixed amount, and what remains keeps earning — usually at a more cautious rate, because less risk is taken at that age. That is why the calculator asks for two different returns: using the same one for both phases is the most common mistake when doing this by hand.

Ten years of difference beat any contribution

With 20,000 saved, 400 a month and a 6% annual return, someone starting at 35 reaches 65 with about 522,000. The same person starting at 45, contributing exactly the same every month, arrives with about 251,000: 52% less.

And the consequence shows where it counts. Drawing 2,000 a month, the first pot does not run out within the projection; the second is gone by 78. What separated the two was not saving more, it was starting earlier.

How much you can draw without exhausting it

It depends on the relationship between what you take out and what the capital earns. With that 522,000 at 4%, drawing 2,000 a month does not exhaust it within the projection, because the return covers the withdrawal. Raise it to 2,500 and it runs out at 95; raise it to 3,000 and it runs out at 87. The jump is abrupt because every extra euro you take out stops earning a return forever.

You will often see the 4% rule quoted: withdrawing 4% of the initial capital each year is considered sustainable for roughly 30 years. It is a useful reference point, not a law: it comes from a study of the twentieth-century US market, and whether it holds depends on the sequence of returns, on taxes, and on how long you live.

Thirty years of inflation change the answer

This is the blind spot in almost every retirement projection. The 522,000 you build over thirty years is worth about 249,000 in today's money at 2.5% inflation: less than half. And the 2,000 a month that looks comfortable today will buy considerably less by the time you draw it. Enter an inflation rate and the calculator gives you the capital and the balance in today's money too.

Common mistakes

• Using the same return before and after retiring. The portfolio usually turns more conservative at retirement, and the expected return with it.
• Planning to a specific age. If your projection runs out exactly at 85, you do not have a plan: you have a bet on how long you will live.
• Forgetting the state pension or other income. This tool projects your capital only. If you will have another income source, what you need to draw from here is less.
• Ignoring inflation. Over thirty years it is the factor that distorts the figure most, and the one most easily forgotten.

Frequently asked questions

What does it mean that the capital "does not run out"?

That with the figures entered, the return covers what you withdraw, so the balance does not reach zero within the horizon the tool projects, which runs to age 100. It is not a promise that it lasts forever: it depends on the return holding up.

Does it include the state pension?

No. It projects only the capital you build and draw down yourself. If you will receive a pension, subtract it from your expected monthly spending and use the difference as the monthly withdrawal.

What return should I use after retiring?

Usually lower than during accumulation, because the portfolio turns more conservative. The prudent approach is to project with a low figure and check the plan still holds.

This tool projects one scenario from the figures you enter. It does not predict returns, does not include taxes, state pensions or healthcare costs, and is not financial or retirement planning advice.