Social Security Is Not Included
Why the chart is only part of the picture
This calculator projects what your savings will produce. It does not know about Social Security, a pension, rental income, or the part-time work you might do at 67. Leaving those out makes the target look larger than it is.
How much Social Security typically covers
For a median earner, Social Security replaces something in the neighborhood of 40% of pre-retirement income. Lower earners see a higher replacement share and higher earners see a lower one.
That is a substantial piece of the puzzle. A household needing $70,000 a year might receive $30,000 from Social Security, leaving $40,000 for the portfolio to produce.
At a 4% withdrawal rate, that reduces the required portfolio from $1.75 million to $1 million, which is a very different planning problem.
- Social Security replaces roughly 40% of income for a median earner.
- Benefits are inflation-adjusted, which is rare and valuable.
- Claiming at 70 instead of 62 substantially increases the monthly amount.
- Your personalized estimate is available from the Social Security Administration.
- Pensions, rental income, and part-time work reduce the portfolio target too.
Get your actual estimate
The Social Security Administration provides a personalized benefit estimate based on your real earnings history. It takes a few minutes to create an account and look it up.
That number is far more useful than any general guideline, because benefits depend on your specific earnings across your highest thirty-five years.
Check the earnings record while you are there. Errors happen, and they are much easier to correct close to when they occurred.
Do the subtraction properly
Start with your realistic annual spending in retirement. Subtract Social Security, pension income, and any other reliable source.
Multiply only the remainder by twenty-five to get the portfolio target. This is the step people skip, and skipping it inflates the goal considerably.
Run the calculator against that reduced target instead of the full spending figure, and the required contribution becomes much more realistic.
Do not over-rely on it either
Benefits depend on policy that can change, and the timing of your claim affects the amount significantly. Planning as though the current schedule is guaranteed for forty years carries some risk.
A reasonable middle path for younger workers is to plan on receiving a meaningful benefit while not assuming it covers the majority of your needs.
Building a portfolio that could cover more than the gap gives you flexibility regardless of how the policy landscape evolves.
The claiming decision is worth real money
Benefits can be claimed as early as 62 or as late as 70, and the monthly amount differs substantially between those endpoints.
Delaying increases the benefit permanently and the increase is inflation-adjusted, which functions somewhat like buying additional guaranteed income.
For married couples the decision is more complex, because survivor benefits depend on the higher earner's claiming age. Coordinating the two claims can matter more than either one alone.
This is one area where a session with a fee-only planner often pays for itself, because the decision is permanent and the amounts involved are large.
Try these inputs
- Portfolio alone: target for $70,000 a year at 4%
- After Social Security: target for the remaining $40,000 a year
- With a pension too: subtract that before calculating