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Saving for retirement can feel intimidating and overwhelming. How much do you really need to retire? How do you know when you've saved enough?

Business Insider's free retirement calculator shows you whether or not you're on track for retirement. Find out how much money you need to save for your future retirement, including how inflation may affect your retirement funds. 

Here's how to use Business Insider's free retirement calculator. 

Keep in mind that the retirement calculator is only a rough estimate of how much you will have in retirement savings/how much you will need to retire comfortably. Retirement planning requires consistent tweaks and adjustments to best match your lifestyle and needs over the long term.

How a retirement calculator works

The best retirement calculators provide rough estimates of how much you need to save for future retirees based on personal and financial information. The last thing you want to do is deplete all your savings. 

By providing basic information — such as your age, income, savings rate, retirement balances, expected retirement spending, and how long you plan to work — the retirement savings calculator estimates the overall value of your retirement savings. The more detail you can provide, the better the retirement calculator can estimate the value of your future savings. 

When it comes to retirement savings, a general rule of thumb is that the earlier you start saving, the better. The best way to grow long-term wealth is by investing your savings and accumulating compound interest. If you're not already contributing to a retirement savings plan like a 401(k) or IRA, now is the time to get started. 

"If you start investing in your retirement plans in your early 20s, the more likely you'll have a larger pool of money to support you in retirement than if you start saving and contributing to retirement accounts later in life," says Chloe Wolhforth, CFP and partner at Angeles Wealth Management. 

Inflation is taken into consideration when calculating retirement savings. But remember a retirement calculator can't predict the future and the actual rates of inflation may vary. 

How to fill out the retirement calculator

For the retirement calculator, we define a comfortable retirement as being able to live on 70% of your pre-retirement income. However, the retirement calculator is customizable. If you're able, incorporate as many specific details as possible. 

Here's what you'll need to input:

  • Personal information: Current age and the age at which you expect to retire. 
  • Current retirement balance: The total amount of retirement savings you have across all your accounts, including 401(k)s and IRAs.
  • Current household income: Your annual gross income (the amount you earn before taxes).
  • Rate of savings: How much money you save toward retirement each month. You can enter this as a dollar amount or a percentage of your income.

The following inputs are pre-filled, but you can change some to customize your retirement calculation further.

  • Expected annual salary increases: How much do you expect your salary to increase by each year? The calculator's default is 2%.
  • Anticipated monthly spending in retirement: We assume you'll spend 70% of your pre-retirement income (the amount you're projected to be earning right before you retire), but you can change that number if you expect to spend more or less.
  • Life expectancy: How long do you expect to live? The default calculation uses a life expectancy of 100 years.
  • Investment returns: We assume your savings are invested and earn a 5% annual rate of return. If your retirement savings are invested, you may be missing out on earning capitalizing on compound interest. 

Benefits of using a retirement calculator

Our retirement calculator is designed to track your progress toward retirement. It's based on the idea that Americans generally spend less as they age and can therefore sustain a 30- to 40-year retirement on 70% of their pre-retirement income. 

The calculator generates two important numbers:

  1. The amount you will have by your desired retirement age. By providing your current savings rate and retirement account balances, we're able to estimate how much money you'll have in savings or investments by retirement. 
  2. The amount you will need by your desired retirement age. Using your current income and expected salary increases, we're able to estimate how much money you'll need in savings or investments by retirement. 

Using a retirement calculator to see where you stand provides several benefits. 

  • Snapshot of your future: A rough estimate of how much money you'll need to retire by a certain age is better than having no estimate at all.
  • Identify shortfalls: The calculator shows if you might fall short of your financial goal, allowing you to plan for a higher savings rate or find sources of supplementary income.  
  • See your options: By adjusting the calculator's inputs — such as changing your savings rate or your planned retirement age — you can see how your overall plan is affected.

"Depending on when you want to retire, your employment, your tax status and other considerations, a blend of multiple accounts may be suitable," says Jordan Gilberti, CFP and senior lead planner at Facet Wealth - Product Name Only. 

Check out the best online financial advisors>>

How to catch up on your retirement savings

If the retirement calculator shows you are falling short of your financial target, don't be discouraged. There's still time to make adjustments to your savings rate or investment strategy to get closer to meeting your goal. 

One of the most effective ways to catch up on retirement savings is to increase your income. A nationwide labor shortage has given workers some negotiating power. If you're unable to score a raise in your current position, consider switching jobs for a higher salary or better benefits, such as a more generous 401(k) match or investing in stocks and similar assets.

Also consider maxing out your 401(k), contributing to an IRA, or working with a financial advisor to further boost your savings. 

"Investing is a critical part of growing wealth. It is important to invest savings that you have identified as long-term so your assets can grow over time," says Wolhforth. 

Above all, be flexible. As you approach retirement, consider taking a part-time job, waiting to claim Social Security benefits, downsizing your home, or relocating to a more affordable city. 

Retirement calculator — Frequently asked questions (FAQs)

How much money do you need to retire with $80,000 a year income?

If you're saving 20% of your paychecks each month with a $80,000 annual income, you can have over $2 million in retirement savings by age 65. But depending on your current age, estimated age of retirement, 401(k) match, and annual average pay increase you may have more or less. 

What is the $1,000-a-month rule for retirement?

The $1000-per-month rule for retirement is an investment strategy created by Wes Moss that states that you need at least $240,000 saved for every $1,000 per month you want to have in income during retirement. So if you withdraw 5% of $240,000 in savings, you'll have $1,000 every month for that year. 

How much money do you need to retire comfortably at age 65?

Fidelity estimates that you need between 8x to 10x your preretirement income in order to retire at age 65. For example, if your preretirement income is $100,000 per year, you'll need to save between $800,000 and $1,000,000 to retire at age 65. However, how much you need to retire also depends on your estimated life expectancy and lifestyle.

Is $500,000 enough to retire at 62?

You may be able to retire with $500,000 in retirement savings at age 62. Depending on your lifestyle and estimated life expectancy, you may need to save more or less. For a better idea of what you'll need, use a retirement calculator for a rough estimate of how much you'll need. 

Find a financial advisor in your area

You can find financial advisors in your area by searching online. The best way to be matched with an advisor is by utilizing platforms that offer matching services across a wide network of advisors, planners, and more.

Some sites to check out for advisors are:

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