Retirement Income Calculator
What can I expect my retirement income to look like?
Planning for retirement can feel overwhelming, especially when you’re trying to figure out how much income you’ll actually have when you stop working. The good news is that with the right tools and information, you can get a clearer picture of your financial future and make better decisions about your retirement savings strategy.
Your retirement income is based on a wide range of factors, including income during employment, the amount you saved, specific retirement account interest rates and other savings. Our retirement income calculator estimates your monthly income during retirement to help you determine whether you’re on track to meet your financial goals.
How different rates affect your retirement income
The rates you enter—such as your expected rate of return before and during retirement, inflation rate and tax rates—have a significant impact on your projected retirement income. For example, a higher rate of return on your investments can increase your future savings, while a higher inflation rate may reduce your purchasing power over time. Try adjusting the rate of return or inflation rate above to see how different scenarios could affect your retirement outlook.
How the inflation rate affects your retirement income
The inflation rate measures how much prices for goods and services increase over time. Even a modest annual inflation rate, which historically averages around 3% annually, can significantly reduce your purchasing power in retirement. By factoring in the inflation rate, you can better estimate how much your savings will be worth in the future and ensure your retirement income keeps up with rising costs.
Understand the common sources of retirement income
When you retire, you'll likely rely on multiple income streams to fund your lifestyle. The common sources of retirement income are:
- Social Security benefits: For most Americans, Social Security is the foundation of their retirement income. While you can get your benefits at 62, waiting until your full retirement age or even later can significantly increase your income
- Employer-sponsored retirement plans: These include 401(k) plans, 403(b) plans for nonprofit employees and traditional pensions
- Personal retirement savings: This category includes IRAs, Roth IRAs and other accounts you've opened independently. These accounts often provide more investment flexibility than employer plans and can be helpful if an employer-sponsored plan isn't an option for you or if you want to save beyond your workplace plan limits
- Other income streams: Consider rental property income, part-time work, business income or investment dividends. Some retirees also receive income from royalties, annuities or other specialized investments. Don't forget to factor in any inheritance you might reasonably expect
Estimate annual expenses in retirement
Understanding your future expenses is just as important as calculating your income sources. Here are the major expense categories to consider when planning your retirement budget:
- Housing costs: This typically remains your largest expense, including mortgage payments, property taxes, maintenance, utilities and homeowner's insurance. Even if your housing is paid off, property taxes and upkeep costs continue
- Healthcare expenses: Medical costs almost always increase during retirement, including Medicare premiums, supplemental insurance, prescription medications and potential long-term care needs
- Food and groceries: Your food budget might decrease if you're no longer buying work lunches, but could increase if you dine out more frequently or have more time for cooking elaborate meals
- Transportation: Costs may decrease without daily commuting, but could rise if you plan extensive travel or need to maintain multiple vehicles
- Insurance premiums: Auto and homeowner's insurance continue, though some insurers offer senior discounts that can help reduce these costs
- Entertainment and hobbies: You might spend less on work clothes but more on recreational activities, travel and pursuing new interests with your additional free time
Most financial advisors recommend aiming for 70-80% of your pre-retirement income. However, this rule isn't perfect for everyone. Some people spend more in early retirement due to increased travel and activities, while others spend less because their mortgage is paid off and they have fewer work-related
Strategies to Boost Retirement Income
There are several strategies that can help you boost your retirement income and bridge any gaps in your financial planning. These include:
- Delay Social Security benefits: Your benefits increase significantly if you wait. For each year you delay past your full retirement age until age 70, your benefits increase by approximately 8%
- Contribute more to retirement accounts: If you're under 50, the 401(k) contribution limit is $23,500 for 2025. If you're at least 50 years old, you can make "catch-up" contributions of $11,250. Similarly, IRA contribution limits allow additional savings, and maxing out these accounts can significantly boost your retirement income
- Consider annuities for guaranteed income: Annuities can provide a steady stream of income that you'll never outlive. While they may not be suitable for everyone due to fees and complexity, they can be valuable for individuals concerned about market volatility or longevity risk. Fixed annuities provide predictable payments, while variable annuities offer potential for growth
- Downsize or relocate to lower expenses: Moving to a smaller home or a more affordable area can free up significant money for other expenses or allow your savings to stretch further. Some retirees relocate to states with no income tax or lower property taxes, which can meaningfully impact their budget
- Explore part-time work in retirement: Many retirees find that working part-time provides both additional income and social interaction. This doesn't have to be your career job — many people explore new interests or turn hobbies into income-producing activities
Common Mistakes to Avoid
When planning your retirement income, there are several costly mistakes that can derail your financial security. Being aware of these pitfalls can help you make better decisions and avoid problems that might not become apparent until it's too late to fix them.
- Ignoring inflation: Many people underestimate the impact of inflation on their purchasing power over a 20- to 30-year retirement. What costs $1,000 today will cost approximately $1,800 in 20 years, assuming an annual inflation rate of 3%. Always factor inflation into your calculations and consider investments that have historically outpaced inflation
- Overestimating investment returns: While the stock market has historically returned about 10% annually, you shouldn't assume this will continue indefinitely or that you'll achieve these returns
- Underestimating healthcare costs: Healthcare is often the fastest-growing expense category for retirees. Many people are unaware of the significant increase in medical expenses that occurs with age, particularly for prescription medications and specialized care. This doesn't include long-term care, which can quickly become a significant financial burden if not properly planned for
- Not planning for taxes in retirement: Many people assume they'll be in a lower tax bracket during retirement, but this isn't always true. Social Security benefits may be taxable, and required minimum distributions from traditional retirement accounts can push you into higher tax brackets
How California Credit Union can help you prepare for retirement
We can help you find the right retirement savings plan and investment opportunities based on your retirement goals and unique financial situation. Browse our offerings online to take advantage of our financial counseling and estate planning services to maximize your retirement savings.
And for more personalized guidance, our Wealth Management services can connect you with experienced financial advisors who can help you build a customized retirement strategy. Whether you're just starting out or refining your plan as retirement approaches, our advisors provide ongoing support to help you stay on track.
California Credit Union cannot and does not guarantee the accuracy or the applicability to your individual circumstances. All examples are hypothetical and are for illustrative purposes. Calculator results are estimates based on information you provided and California Credit Union does not guarantee your ability to receive these terms. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.
