Retirement Calculator: Are You Saving Enough?

Three Case Studies — Planning Retirement at 25, 40, and 55

The question keeps millions of Americans up at night: Am I saving enough for retirement? According to a 2025 Federal Reserve survey, nearly 25% of non-retired adults have no retirement savings whatsoever, and among those who do, the median balance is just $65,000 — far below what most financial advisors recommend.

The challenge is that retirement planning isn't one-size-fits-all. A 25-year-old software engineer and a 55-year-old teacher face fundamentally different realities. That's why we built this guide around three real-world case studies — showing exactly how time, savings rate, and compound interest interact at different stages of life.

Case Study 1: Sarah, Age 25 — The Power of Starting Early

Sarah's story illustrates the single most powerful force in retirement planning: time. By starting at 25, she has 40 years for compound interest to work its magic. Notice that her investment growth ($2.1 million) is nearly 7 times what she actually contributed.

The math behind this is remarkable. Sarah contributes just $538/month (her $500 plus the employer match), but compound interest at 7% turns this modest monthly habit into over $2.4 million. If she increased her contribution to $800/month, her retirement balance would jump to $3.4 million — an extra $1 million for just $270 more per month.

Sarah's optimal strategy:

• Increase contributions by 1% of salary each year (takes advantage of raises)
• Invest aggressively (90% stocks / 10% bonds at age 25)
• Max out Roth IRA ($7,000/year in 2026) for tax-free withdrawals in retirement
• Never cash out when switching jobs — roll over 401(k) to avoid taxes and penalties

Case Study 2: Marcus, Age 40 — Catching Up Mid-Career

Marcus is in a different position. With 25 years until retirement, he has less time for compounding but higher income to contribute more aggressively. His existing $75,000 in savings is a solid foundation, but he needs to close the gap between his current trajectory and his retirement goals.

Assuming Marcus needs $70,000/year in retirement (adjusted for inflation), the 4% rule suggests he needs approximately $1.75 million. He's close but needs to close a $65,000 gap. Here's how:

• Increase 401(k) contributions to maximum: The 2026 limit is $23,500. At his current $12,000 plus $3,800 match, he has room to add $7,700 more.
• Open a backdoor Roth IRA: Since his income exceeds Roth IRA limits, he can use the backdoor Roth strategy to contribute $7,000/year.
• Adjust asset allocation: At 40, an 80/20 stock/bond split balances growth and risk management.
• Consider delaying Social Security: Each year past full retirement age (67) increases benefits by 8%, up to age 70.

If Marcus increases his monthly contribution to $1,967 (maxing 401(k)), his projected balance at 65 rises to $2,180,000 — comfortably above his target.

Case Study 3: Linda, Age 55 — The Late Sprint

Linda's situation is the most challenging but far from hopeless. With only 10 years until retirement, she has a solid $350,000 foundation but needs to close a significant gap. At $1.065 million, she falls short of the $1.75 million the 4% rule suggests for a $70,000/year retirement lifestyle.

Linda's aggressive catch-up strategy:

• Max 401(k) plus catch-up: At 55+, she can contribute $23,500 + $7,500 catch-up = $31,000/year
• Max HSA: At 55+, contribute $5,500/year to a Health Savings Account (triple tax advantage)
• Catch-up IRA contribution: $1,000 extra in IRA contributions ($8,000 total for 55+)
• Consider working 2-3 extra years: Extending to age 67 or 68 dramatically improves outcomes
• Reduce retirement spending expectations: Downsizing, relocating to a lower-cost area, or part-time work in retirement

If Linda maxes all available accounts and works until 67 (two extra years), her projected balance rises to $1,520,000. Combined with Social Security ($2,500-3,000/month), this provides a comfortable retirement income of approximately $5,500-6,000/month.

The 4% Rule: Understanding Safe Withdrawal Rates

The 4% rule, developed by financial planner William Bengen in 1994, provides a simple framework for retirement withdrawals. The rule states that you can withdraw 4% of your portfolio in year one of retirement, then adjust that amount for inflation each subsequent year, with a high probability of your money lasting 30+ years.

For a $1.5 million portfolio: Year one withdrawal = $60,000. If inflation runs 3%, year two withdrawal = $61,800. This continues for 30 years with over a 95% historical success rate based on U.S. market data from 1926-2020.

Limitations of the 4% Rule

• Assumes a 50/50 stock/bond portfolio: More aggressive portfolios may support higher withdrawal rates, while conservative ones may require lower rates.
• Based on U.S. historical data: International markets have shown different patterns. A 3-3.5% withdrawal rate provides a larger safety margin.
• Doesn't account for taxes: Withdrawals from traditional 401(k)s and IRAs are taxed as ordinary income. Roth withdrawals are tax-free.
• Sequence of returns risk: A market crash early in retirement can devastate portfolios, even if long-term averages are solid.

Inflation: The Silent Retirement Killer

Inflation is arguably the biggest threat to retirement security. At an average 3% annual inflation rate:

Your retirement savings must not only maintain purchasing power but grow enough to keep pace with rising costs. Healthcare inflation runs even higher than general inflation — historically 5-6% annually — making it the single largest expense category for many retirees. Medicare covers only about 60% of healthcare costs, and the average 65-year-old couple can expect to spend $315,000-$350,000 on healthcare throughout retirement.

This is why our retirement calculator includes inflation-adjusted projections. Simply entering your current savings and contributions without accounting for inflation dramatically overestimates your retirement purchasing power.

Retirement Savings Benchmarks by Age

Fidelity's widely-cited guidelines suggest having saved the following multiples of your annual salary by each age:

• Age 30: 1× salary
• Age 35: 2× salary
• Age 40: 3× salary
• Age 45: 4× salary
• Age 50: 6× salary
• Age 55: 7× salary
• Age 60: 8× salary
• Age 67: 10× salary

These benchmarks assume starting to save at age 25, saving 15% of income (including employer match), and earning moderate investment returns. If you're behind, don't panic — but do take action. Our retirement calculator can show you exactly how much more you need to save to close the gap.