Retirement Income Gap Calculator

Calculate the gap between what your guaranteed income covers and what you need in retirement, then find out exactly how much more you must save each month to close it.

Monthly income your portfolio must cover

$3,200

This is what your portfolio must generate each month in retirement.

Portfolio size needed at retirement

$960,000

Detailed results
Projected savings at retirement	$858,374
Additional savings needed (gap)	$101,626
Additional monthly contribution to close gap	$147
Portfolio surplus or deficit at retirementProjected deficit — you need to save more.	-$101,626
Years to retirement	25 yr

What this result means

Your portfolio must generate $3,200/month in retirement (the amount guaranteed income doesn't cover). At your 4% withdrawal rate, you need a $960,000 portfolio, but your current savings are projected to reach only $858,374 — a $101,626 shortfall. Adding $147/month to your retirement contributions over 25 years closes the gap.

Savings Growth Milestones

Projected savings balance and on-track milestone target at years 5, 10, 15, 20, 25, and retirement.

Savings Growth Milestones. 5 rows, first 5 shown.
Years from Now	Age	Projected Balance	On-Track Target
5	45	$267,645	$192,000
10	50	$358,170	$384,000
15	55	$479,312	$576,000
20	60	$641,427	$768,000
25	65	$858,374	$960,000

How this is calculated

years_to_retirement = retirement_age − current_age
portfolio_income_needed = max(0, monthly_expenses − social_security − pension − other_income)
portfolio_needed = (portfolio_income_needed × 12) / (withdrawal_rate / 100)
projected_savings = current_savings × (1 + expected_return / 100)^years_to_retirement
savings_gap = max(0, portfolio_needed − projected_savings)
monthly_savings_needed = savings_gap × (r/12) / ((1 + r/12)^(years × 12) − 1)   [PMT formula]
surplus_or_deficit = projected_savings − portfolio_needed

What is the retirement income gap?

The retirement income gap is the difference between what you plan to spend each month in retirement and what your guaranteed income sources — Social Security, pensions, and other recurring income — will provide. That gap is what your investment portfolio must generate through withdrawals.

The 4% rule and portfolio sizing

The most widely used benchmark for sustainable withdrawals is the 4% rule, derived from research by financial planner William Bengen and later confirmed by the Trinity Study. It suggests that a retiree who withdraws 4% of their portfolio in year one and adjusts for inflation each year has historically avoided depleting their savings over a 30-year horizon across most market conditions. Dividing your required annual portfolio withdrawal by your chosen withdrawal rate gives you the portfolio target — the number this calculator solves for.

Why guaranteed income changes everything

Every dollar of Social Security, pension, or rental income reduces the amount your portfolio must cover. A $1,500/month Social Security benefit at a 4% withdrawal rate is equivalent to having an extra $450,000 in savings. Delaying Social Security claiming from 62 to 70 can increase your benefit by 76% — often the single highest-return financial decision available to a pre-retiree.

Closing the gap

If your projected savings fall short of the portfolio target, you have three levers: save more now (the monthly contribution figure this calculator provides), adjust your spending target downward, or plan to supplement with part-time income in early retirement. A gap identified today, with 20+ years of compounding ahead, is far cheaper to close than the same gap discovered at 60.

Assumptions

Monthly expenses in retirement are entered in retirement-day dollars — no inflation adjustment is applied between now and retirement.
Portfolio return is constant each year at the entered nominal rate; real market returns vary and sequence-of-returns risk is not captured.
Current savings are assumed to grow at the expected return with no additional contributions beyond the 'monthly savings needed' figure.
Social Security, pension, and other income are entered in nominal dollars and are assumed constant (not COLA-adjusted) for the gap calculation.
The withdrawal rate is applied to the portfolio needed at the start of retirement; the calculator does not simulate year-by-year depletion.
Monthly savings needed is calculated using a future-value of annuity (PMT) formula assuming monthly compounding at the same expected return.
This calculator does not account for taxes on withdrawals, RMDs, healthcare costs, or estate goals.
If current age equals or exceeds retirement age, all outputs return zero — adjust ages to generate a projection.

Frequently asked questions

›What if I have no pension?

Leave the pension field at $0. The calculator assumes all retirement spending not covered by Social Security and other income must come from your portfolio. Many Americans have no pension — the gap analysis still works, it simply sizes your portfolio target entirely around your Social Security benefit and other recurring income.

›How does Social Security affect the income gap?

Social Security directly reduces the portfolio income gap. Every dollar of monthly Social Security benefit reduces the annual portfolio withdrawal by $12. At a 4% withdrawal rate, $1,000/month in Social Security is equivalent to $300,000 in additional savings. Use the SSA.gov Retirement Estimator to get a personalized benefit estimate at different claiming ages.

›Is the 4% withdrawal rate still safe?

The 4% rule is a historical benchmark, not a guarantee. Some researchers now suggest 3–3.5% for longer retirements (35+ years) or pessimistic return environments. Others argue it remains conservative if a retiree is willing to spend flexibly — cutting back in down markets. Use the withdrawal rate field to stress-test your plan: try 3%, 3.5%, and 5% to see how sensitive the portfolio target is to this assumption.

›What if my market returns are lower than expected?

Lower returns reduce the future value of your current savings, widening the gap. Try reducing the expected return to 4% or 5% to see a more conservative scenario. Sequence of returns risk — the danger of large losses early in retirement — is not modeled here. If you are concerned about sequence risk, consider a lower withdrawal rate and a floor of guaranteed income covering essential expenses.

›Can I retire early with a retirement income gap?

An early retirement with a gap is possible but requires either aggressively closing the gap through savings, accepting a lower spending target, or planning for part-time income in early retirement (enter that in 'other income'). Early retirement also means Social Security benefits are typically lower (fewer years of earnings) and the withdrawal period is longer — many planners use a 3–3.5% withdrawal rate for retirements expected to last 40+ years.