True Cost

Retirement Calculator

Run 1,000 Monte Carlo simulations to estimate your probability of retirement success. Model tax buckets, Social Security timing, Roth conversions, and state-specific taxes.

SimpleAdvanced Planning
$

Texas has no state income tax.

$

401k, IRA, Roth, brokerage — everything

$
80% stocks
ConservativeBalancedAggressive

Est. return: 8.8%/yr

Enter your information to see projections

Retirement Planning — Guide & Research
💰

How Much Do You Need to Retire?

The most common starting point is 25× your annual spending — the foundation of the 4% rule. If you plan to spend $60,000 per year, you'd need $1.5 million. But this single number hides enormous variation: it assumes a 30-year retirement, no Social Security, no pension, and no state income tax.

In reality, a 65-year-old couple with $1,200/month in combined Social Security benefits needs far less in savings than a single 55-year-old with no guaranteed income. The right answer is personal — which is why this calculator models your specific situation across 1,000 possible futures instead of returning a single number.

25×

4% rule target

Annual spending

30 yrs

Planning horizon

Typical at age 65

85–90%

Success target

Monte Carlo score

📊

How Monte Carlo Simulation Works

Instead of assuming your portfolio earns exactly 7% every year, Monte Carlo simulation draws from a realistic distribution of annual returns. The stock market has averaged ~9.5% annually since 1928, but with a standard deviation of ~17% — two-thirds of years fall between −7.5% and +26.5%.

We run 1,000 independent sequences, each drawing random annual returns for every year of your retirement. Some sequences hit a 2008-style crash early; others enjoy a 1990s-style bull run. The fraction that survive to your planning age is your probability of success.

✅

What Monte Carlo captures

Real market randomness, crash timing, bull runs, and sequence-of-returns risk

⚠️

What it doesn't replace

Personalized advice, tax planning, healthcare cost forecasting, and behavioral factors

🏛️

The Best Age to Claim Social Security

For someone with a full retirement age (FRA) of 67, claiming at 62 permanently reduces benefits by 30%. Claiming at 70 permanently increases them by 24% above FRA — a 77% total difference. For most people, delaying is the highest-return, lowest-risk move available.

Claim Agevs. FRA (67)
Age 62−30%
Age 65−13%
Age 67 (FRA)—
Age 70+24%

Break-even for delaying 62→70 is typically around age 80–82. For married couples, the higher earner should usually delay to 70 to maximize the survivor benefit.

🧾

Tax-Smart Retirement Withdrawals

The order you withdraw from Traditional (pre-tax), Roth (post-tax), and taxable accounts can meaningfully affect lifetime taxes. The Roth conversion window — between retirement and age 73 when RMDs begin — is often the most valuable tax-planning opportunity available.

📋

Traditional (pre-tax) withdrawals

Taxed as ordinary income. Required minimum distributions begin at age 73.

✅

Roth withdrawals

Tax-free. No RMDs. Best preserved last for maximum tax-free growth.

💡

Roth conversion window

Convert Traditional → Roth between retirement and 73 at low tax rates. Reduces future RMDs.

🗺️

State taxes matter enormously

Florida: no income tax. Pennsylvania: exempts most retirement income. California: taxes everything.

❓

Retirement Calculator — Frequently Asked Questions

How much do I need to retire?

Start with 25× your planned annual spending — the 4% rule. Then subtract guaranteed income (Social Security × 25, pension × 25) to get the portfolio gap. Adjust for your state's tax treatment — California retirees pay much more than Florida retirees on the same income.

Can I retire at 60 with $1 million?

Maybe. At $40,000/year spending and 4% withdrawal, $1M is exactly at the boundary. But 60 means a 30+ year retirement with no Social Security for 2+ years (earliest claim is 62). Our simulator shows the probability given your specific income and state taxes.

What is the 4% rule for retirement?

Withdraw 4% of your portfolio in year one, then adjust for inflation each year. In historical 30-year periods, this worked about 95% of the time. It's a useful starting point but not a guarantee — Monte Carlo simulation gives a more nuanced picture.

How does Social Security affect retirement planning?

Social Security is the most powerful guaranteed income source most Americans have. Every dollar of Social Security replaces about 25 dollars of portfolio savings needed (at 4% SWR). Maximizing your benefit through optimal claiming is often worth more than any investment decision.

What is sequence of returns risk?

A market crash in your first 5 years of retirement is far more damaging than the same crash at year 20. You're forced to sell at low prices, permanently reducing the shares that will recover. Our stress test scenario models a −20%, −15%, +5% sequence in years 1–3 of retirement.

When should I start a Roth conversion?

The window between retirement and age 73 (before RMDs begin) is often optimal. If your taxable income is low in those years, you can convert Traditional to Roth at 12–22% tax rates, reducing future RMDs and potentially saving significant lifetime taxes.

How do taxes work in retirement?

Traditional withdrawals are taxed as ordinary income. Roth withdrawals are tax-free. Social Security is up to 85% taxable based on your provisional income. RMDs start at 73 and are mandatory taxable income. State taxes vary wildly — Pennsylvania taxes zero; California taxes everything.

What is a Monte Carlo retirement simulation?

Rather than assuming a fixed annual return, Monte Carlo runs thousands of randomized market sequences using historical volatility. The result is a probability — e.g., "87% chance your money lasts to age 90" — rather than a single-point prediction that assumes markets are predictable.

Retirement Calculator: Monte Carlo & Tax Analysis | True Cost | True Cost