Retirement Calculator

How much should I have saved by age 40?

Fidelity's widely-cited benchmark is 3x your annual salary by 40, 6x by 50, 8x by 60, and 10x by 67. By that rule a 100K USD earner should have 300K USD saved by 40. These are median guidelines, not prescriptive targets — a high-cost-of-living area, dependents, or different retirement age assumptions will shift the real target materially. A more useful metric is your savings rate: if you are saving 15 to 20 percent of gross income (including employer match) starting in your late 20s and investing in a diversified low-cost portfolio, you will likely hit financial independence by your early 60s regardless of where you are at 40. This is not financial advice; a fee-only fiduciary can model your specific situation.

What is the 4 percent rule and is it still valid?

The 4 percent rule, from William Bengen's 1994 research and the Trinity Study, says a 60/40 portfolio can sustain 4 percent initial withdrawal (adjusted for inflation annually) for 30 years with high probability of success. It was derived from US historical data 1926-1976. Current researchers disagree on whether 4 percent remains valid at today's elevated stock valuations and low real bond yields. Wade Pfau argues for 3.0 to 3.3 percent; Michael Kitces argues 4 percent is still fine with minor adjustments; Morningstar 2023 recommended 3.8 percent. For a 30-year retirement, 3.5 to 4 percent is a defensible range. For longer retirements or pessimistic market assumptions, start at 3.3 percent and add back if markets cooperate.

Should I max out my 401(k) or contribute to a Roth IRA first?

General priority order for most earners: (1) Contribute to 401(k) up to the full employer match — this is free money. (2) Max out HSA if eligible (2024 limit 4,150 single, 8,300 family) — triple tax advantaged. (3) Max out Roth IRA (7K limit, 8K with catch-up at 50+) — tax-free growth and no RMDs. (4) Return to 401(k) and max it out (23K limit, 30.5K with catch-up at 50+). Above 145K USD wages the SECURE 2.0 Act requires catch-up to be Roth 401(k) starting 2026. Roth versus Traditional 401(k) depends on your current-versus-retirement bracket — split 50/50 if you are unsure. This is not tax advice; your CPA should confirm the order for your marginal rate and state tax situation.

How does Social Security factor into retirement planning?

Social Security replaces roughly 40 percent of pre-retirement income for average earners and 25 to 30 percent for high earners, indexed to inflation for life. Your benefit is calculated from your highest 35 years of earnings (up to the annual wage base, which was 168,600 USD for 2024). Full retirement age is 66 to 67 depending on birth year; early claim at 62 reduces benefits by 25 to 30 percent; delaying to 70 adds 8 percent per year beyond FRA. For married couples the survivor benefit optimization — have the higher earner delay to 70 — often adds 100K+ USD of lifetime benefit. Use the SSA's my Social Security estimator with your actual earnings record for a reliable number, not the generic calculator output.

When can I take money out of my 401(k) without penalty?

The default age is 59.5 — before that, withdrawals from a traditional 401(k) or IRA incur a 10 percent early-withdrawal penalty on top of ordinary income tax. Exceptions: the Rule of 55 allows penalty-free 401(k) withdrawals from your current employer's plan if you separated from service in or after the year you turn 55 (50 for qualified public safety workers). Rule 72(t) allows substantially equal periodic payments (SEPP) at any age without penalty, but you must continue for 5 years or until 59.5, whichever is later. Roth IRA contributions (not earnings) can be withdrawn tax- and penalty-free at any age. Disability and certain medical expenses also qualify for penalty-free withdrawal. RMDs begin at age 73 under SECURE 2.0 (age 75 for those born 1960 or later).