💰 Retirement Planning Dashboard

Key Assumptions:

• Constant Returns: Calculator assumes steady annual returns without market volatility
• Inflation-Adjusted: All "today's dollars" figures account for inflation using your specified rate
• Contribution Timing: Contributions assumed to be made at the beginning of each year
• Account Allocation: If not specified, assumes 100% Traditional contributions

Limitations:

• Does not account for sequence of returns risk
• Assumes no mid-career breaks or income changes (unless salary increase enabled)
• Tax law changes not anticipated

Step-by-Step Guide:

1. Enter your current income - Your gross annual salary before taxes
2. Set your contribution - Either as a dollar amount or percentage of income
3. Choose return rate - Historical stock market average is 7-10% annually
4. Set inflation - Historical average is 2-3% annually
5. Enter your ages - Current age and target retirement age
6. Add current savings - Total amount already saved
7. Set desired income - How much you want per year in retirement

Pro Tips:

• Break down contributions by account type to see tax optimization
• Use 70-80% of current income as a starting point for retirement needs
• Include salary increases if you expect regular raises
• Break down current savings to see account-specific projections

Safe Withdrawal Rates:

• 3.5%: Very conservative - highest probability of never running out
• 4.0%: Traditional "4% rule" - 95% success rate over 30 years
• 4.5%: Moderate - acceptable for shorter retirements or flexible spending
• 5.0%: Aggressive - higher risk of portfolio depletion

Inflation Adjustments:

• "At Retirement" values show nominal dollars in the future
• "In Today's Dollars" values show purchasing power in current dollars
• Uses your specified inflation rate for all calculations

Account Growth:

• All accounts assumed to grow at the same rate
• Compounds annually based on your return rate
• Does not account for changing asset allocations over time

Reading the Results:

• Projected Savings: Total portfolio value when you retire
• Safe Withdrawal Cards: Shows annual income at different withdrawal rates
• Shortfall Warning: Appears if savings won't support desired income

What the Colors Mean:

• Green: On track or ahead of goals
• Yellow: Close to goal but needs attention
• Red: Significant shortfall - action needed

Taking Action:

If you have a shortfall:

• Increase contributions if possible
• Work a few more years before retiring
• Reduce desired retirement income
• Seek higher investment returns (with appropriate risk)

Median Social Security Benefits (2024):

Note: The calculator uses median U.S. household benefits based on your filing status. Your actual benefit depends on your complete earnings history.

Key Points:

• Full Retirement Age: 67 for anyone born in 1960 or later
• Early Claiming: Permanently reduces benefits by ~6.7% per year before FRA
• Delayed Claiming: Increases benefits by 8% per year up to age 70
• Spousal Benefits: May be available for married couples
• Taxation: Up to 85% of benefits may be taxable depending on income

Check Your Actual Benefit:

Create an account at ssa.gov to see your personalized benefit estimate based on your actual earnings record.

NEW Scoring System (100 points total):

Bonuses & Penalties:

• Tax Diversification Bonus: Up to +5 points for having savings in multiple account types (Traditional, Roth, Brokerage)
• SS Dependency Penalty: Up to -5 points if Social Security covers more than 50% of retirement income

Why the Change?

The new system focuses on what matters most: whether your plan will actually work. Peer comparisons are still shown but carry less weight, because your success depends on meeting YOUR goals, not beating national averages.

How to Boost Your Score:

1. Increase Goal Achievement (35 pts available):

• This is THE most important factor
• Increase contributions to close any shortfall
• Consider working 1-2 years longer
• Adjust retirement income expectations if needed

2. Optimize Retirement Timeline (25 pts available):

• Standard 30-year retirement gets full points
• Very early retirement (40+ years) is riskier
• Consider part-time work in early years
• Build larger cushion for longer retirements

3. Increase Savings Rate (25 pts available):

• Aim for at least 15% of income
• Include employer match in calculation
• Increase by 1% each year if below target
• Max out tax-advantaged accounts first

4. Earn Bonus Points:

• Tax Diversification: Spread savings across Traditional, Roth, and Brokerage accounts for +5 points
• Reduce SS Dependency: Don't rely on Social Security for more than 50% of income

Quick Wins:

• Set up automatic contribution increases
• Redirect raises/bonuses to retirement
• Review and reduce unnecessary expenses
• Take advantage of employer match (free money!)
• Diversify across account types for tax flexibility

What the Summary Shows:

The Executive Summary provides a high-level overview of your retirement readiness:

• Current Status: Snapshot of where you are today
• Projections: Where you'll be at retirement based on current trajectory
• Key Metrics: Important numbers to track
• Recommendations: Specific actions to improve your situation
• Warnings: Potential issues to address

How to Use It:

• Review regularly (quarterly or annually)
• Share with financial advisor
• Track progress over time
• Use recommendations as action items

💡 Tip: Save a screenshot each year to track your progress!

How Traditional Accounts Work:

• Pre-Tax Contributions: Money goes in BEFORE taxes are taken out
• Immediate Tax Savings: Reduces your current taxable income
• Tax-Deferred Growth: No taxes on gains while the money grows
• Taxed at Withdrawal: Pay ordinary income tax when you withdraw in retirement

2024 Contribution Limits:

Tax Deduction Limits (Traditional IRA):

If you or your spouse have a 401(k) at work, your IRA deduction may be limited based on income:

Key Benefits:

• ✅ Lower your tax bill TODAY
• ✅ No income limits for 401(k) contributions
• ✅ Higher contribution limits than Roth IRA
• ✅ May qualify for Retirement Savings Credit (low-income)

Considerations:

• ⚠️ Required Minimum Distributions (RMDs) starting at age 73
• ⚠️ Withdrawals taxed as ordinary income
• ⚠️ 10% penalty for withdrawals before age 59½ (with exceptions)
• ⚠️ May push you into higher tax bracket in retirement

How Roth Accounts Work:

• After-Tax Contributions: Money goes in AFTER taxes are taken out
• No Current Tax Break: Doesn't reduce your taxable income now
• Tax-Free Growth: All gains grow completely tax-free
• Tax-Free Withdrawals: Pay ZERO taxes when you withdraw in retirement

2024 Contribution Limits:

Roth IRA vs. Roth 401(k) - Key Differences:

Roth IRA Income Eligibility (2024):

What is MAGI (Modified Adjusted Gross Income)?

For most people, MAGI = Gross Income - Traditional 401(k)/IRA contributions

💡 High Earners: The "Backdoor Roth" Strategy

If your income is too high for direct Roth IRA contributions:

1. Make a non-deductible contribution to a Traditional IRA
2. Immediately convert it to a Roth IRA
3. Pay minimal taxes (since it's after-tax money)
4. Enjoy tax-free growth forever!

When to Choose Roth:

• ✅ You're early in your career (lower tax bracket now)
• ✅ You expect higher income in retirement
• ✅ You want tax diversification
• ✅ You want to avoid RMDs
• ✅ You want to leave tax-free inheritance

When to Choose Traditional:

• ✅ You're in a high tax bracket now
• ✅ You expect lower income in retirement
• ✅ You need the immediate tax deduction
• ✅ You're maximizing employer match first

How Brokerage Accounts Work:

• After-Tax Money: You invest money that's already been taxed
• No Contribution Limits: Invest as much as you want, whenever you want
• Taxed on Gains: Pay taxes on dividends, interest, and capital gains
• Flexible Access: No age restrictions or penalties for withdrawals

Tax Treatment:

Capital Gains Tax Rates (2024):

Key Benefits:

• ✅ No contribution limits - invest as much as you want
• ✅ Complete flexibility - withdraw anytime, any amount
• ✅ No age restrictions - access before 59½ without penalty
• ✅ Tax-efficient withdrawals - especially in retirement
• ✅ Tax-loss harvesting - offset gains with losses
• ✅ Step-up basis - heirs inherit with favorable tax treatment
• ✅ No RMDs - never forced to withdraw

Considerations:

• ⚠️ No upfront tax deduction
• ⚠️ Annual taxes on dividends and interest
• ⚠️ Requires discipline (easy to access = easy to spend)
• ⚠️ Short-term trading can trigger higher taxes

Best Uses for Brokerage Accounts:

Tax Efficiency Tips:

• 🎯 Hold investments for >1 year to qualify for long-term capital gains
• 🎯 Use tax-loss harvesting to offset gains
• 🎯 Keep high-dividend stocks in retirement accounts
• 🎯 Hold tax-efficient index funds in brokerage
• 🎯 Time withdrawals when you're in a lower tax bracket

How Brokerage Withdrawals Are Taxed:

This calculator uses a glide path model that adjusts the composition based on your investment time horizon:

Tax Treatment:

Capital Gains Tax Rates:

• 0% Rate: If total income below $47,025 (single) or $94,050 (married)
• 15% Rate: Most middle-income retirees fall here
• 20% Rate: High-income only - $518,900+ (single) or $583,750+ (married)

The Good News: Why You'll Likely Need Less Than Your Current Paycheck

Your retirement paycheck doesn't have to be as big as your work paycheck. Think about all the costs that will simply vanish once you stop working:

• ✅ You Stop Saving for Retirement: One of your biggest "expenses" is saving! Once retired, you're no longer putting 10-15% (or more) of your paycheck into your 401(k) or other retirement accounts.
• ✅ Lower Taxes:
  • You'll no longer pay Social Security and Medicare (FICA) taxes on your income, which is a 7.65% instant savings
  • Your overall income may be lower, potentially placing you in a lower federal and state income tax bracket
• ✅ Goodbye, Work-Related Costs: Daily expenses that will disappear:
  • Commuting costs (gas, public transit, car maintenance)
  • Work lunches, coffee runs, and happy hours
  • Professional wardrobe and dry cleaning
• ✅ Your Mortgage May Be Gone: For many, their mortgage is their single largest monthly expense. If you plan to have your home paid off by retirement, your income needs will drop dramatically.
• ✅ Kids May Be Financially Independent: If you're no longer supporting children or paying for college tuitions, that frees up a significant portion of your budget.

Important Factors to Consider (Your Personal Adjustments)

While many expenses go down, a few new ones might appear. Consider if you should adjust your target income up or down based on these factors:

• ⚕️ Healthcare Costs: This is the most important factor to plan for. While Medicare will cover a lot, it doesn't cover everything. You'll have premiums, deductibles, co-pays, and costs for dental, vision, and hearing that you'll need to budget for. Consider keeping your income target higher to account for this.
• ✈️ Your Retirement Lifestyle (Travel & Hobbies): Do you dream of traveling the world, picking up an expensive hobby, or dining out frequently? The first few years of retirement are often the most expensive as new retirees embrace their freedom. Be realistic about your dreams and budget accordingly.
• 🏡 Home & Location: Do you plan to stay in your current home (with potential for maintenance and property taxes) or downsize to a smaller, more efficient home? Moving to an area with a lower cost of living could significantly reduce your needs.
• 📈 Inflation: Your retirement could last 20-30 years or more. It's important to remember that the cost of goods and services will rise over time, so having a buffer is always a smart move.

Visual breakdown of your projected retirement accounts. Larger rectangles = bigger balances.