This retirement calculator can help with planning the financial aspects of your retirement, such as providing an idea where you stand in terms of retirement savings, how much to save to reach your target, and what your retrievals will look like in retirement.

Retirement is the point when a person withdraws from active working life. For most people, retirement is a permanent transition and lasts for the rest of their lives.

Many factors influence the decision to retire. Health is one of the most common reasons. A decline in physical strength, the onset of disability, or reduced mental capacity can make it difficult to perform job duties. In such cases, retirement or a shift to a less demanding occupation may be the best option. Job-related stress can also become overwhelming and reduce overall satisfaction with work. Age plays a major role as well. Although a person can retire at any point during their career, most retire between the ages of 55 and 70. Some gradually move into retirement by reducing work hours, while others take short-term retirement and later return to the workforce.

Financial readiness is another major factor. While it is possible to retire with little or no savings and rely entirely on Social Security, this can be challenging. Social Security benefits in the United States are designed to replace only about 40 percent of the average worker’s wages. Most people choose to retire when they feel prepared both emotionally and financially.

There is no single answer to how much a person should save because everyone’s needs and circumstances differ. The required savings depend on expected income needs, Social Security benefits, health, life expectancy, preferences for leaving an inheritance, and other personal goals.

Below are commonly used guidelines.

10 Percent Rule
This guideline suggests saving 10 to 15 percent of pre-tax income each year. For example, a person earning $50,000 a year would save between $5,000 and $7,500 annually. Saving 10 percent starting at age 25 can potentially result in a nest egg of around one million dollars by retirement.

80 Percent Rule
This rule proposes that most retirees can maintain their lifestyle with 70 to 80 percent of their pre-retirement income. A person earning $100,000 a year would need roughly $70,000 to $80,000 annually during retirement. The exact amount depends on personal retirement plans. Someone who wants to travel extensively will need more than someone who prefers a simple lifestyle.

4 Percent Rule
People who know their estimated annual retirement expenses can divide that number by 4 percent to find the size of the nest egg they need. Someone who expects to spend $100,000 a year would need about $2.5 million in retirement savings.

Some experts suggest saving 15 to 25 times your current annual income. Other methods and calculators can also help. Speaking with licensed financial professionals is often valuable.

Inflation reduces the purchasing power of money over time. In the United States, the average inflation rate over the past 30 years has been about 2.6 percent. This means a dollar today buys less than half of what it bought 30 years ago. Many people underestimate how much they need to save because they overlook the effects of inflation.

Although inflation affects savings, it is unpredictable and mostly beyond personal control. Most people focus on building strong, steady investment returns rather than trying to plan around future inflation. For those who want added protection, the United States offers inflation-protected investments such as Treasury Inflation-Protected Securities (TIPS). Gold, commodities, and dividend-paying stocks are also traditionally used as hedges.

Retirees in the United States generally rely on a mix of the following sources.

Social Security

Social Security is a government-run program that provides income during retirement. Benefits are based on lifetime earnings but are not proportional. For example, someone earning $20,000 a year might receive about $800 a month, while someone earning $100,000 might receive around $2,000. Social Security replaces roughly 40 percent of a worker’s previous income. Despite this, many people rely heavily on it, and about half of retirees expect Social Security to be their primary income source

Pensions, 401(k)s, IRAs, and Other Savings Plans

401(k), 403(b), 457 Plans
Employer-sponsored retirement plans like 401(k)s are among the most common saving tools. Many employers match employee contributions up to a certain percentage. For example, if an employer matches up to 3 percent of a $60,000 income, they contribute a maximum of $1,800 each year. These contributions are pre-tax and grow tax-deferred until retirement, when withdrawals are taxed at ordinary income rates.

Traditional and Roth IRAs
Traditional IRAs allow pre-tax contributions that are taxed upon withdrawal. Roth IRAs work in the opposite way. Contributions are made with after-tax dollars, and withdrawals during retirement are tax-free. Both offer important tax advantages.

Pension Plans
Pensions provide employees with guaranteed income during retirement. They are still common among public sector workers and some private companies. Retirees can choose fixed payouts or convert the pension into an annuity. Although pensions are less common today, they remain a valuable source of retirement income for those who have them.

Investments and Certificates of Deposit (CDs)
People who have maxed out tax-advantaged accounts often turn to investments such as mutual funds, index funds, individual stocks, real estate, bonds, gold, and CDs. Each investment type carries different risks and rewards. CDs and fixed income investments offer stability and are popular among retirees seeking dependable income.

Personal Savings
Savings accounts, checking accounts, and money market accounts are convenient but not ideal for long-term retirement savings because they offer low returns that rarely keep up with inflation. They are useful for building an emergency fund, which is an essential part of financial planning.

Home Equity and Real Estate
Some retirees use a reverse mortgage to convert home equity into cash. In a reverse mortgage, the lender pays the homeowner, and ownership eventually transfers to the lender after the final payment.

Annuities
Annuities provide guaranteed payments for life. Immediate annuities begin paying soon after purchase, while deferred annuities accumulate value first and pay later. These can be helpful for retirees who want predictable income.

Passive Income
Passive income streams include rental properties, business income, stock dividends, and royalties. They are useful when retirement accounts have reached contribution limits.

Inheritance
Inherited assets can also support retirement, although taxes may apply depending on federal and state rules. Real estate or valuable items may also trigger capital gains taxes if sold for profit.