The Retirement Savings Tracker helps you monitor your retirement savings, including 401(k), IRA, and taxable accounts. It estimates your total savings at retirement and calculates an annual “pension” based on popular withdrawal rules, such as the 4% rule. This tool provides a comparable and easy-to-understand perspective on your self-funded retirement savings, similar to traditional pensions offered in the public sector.

However, it’s important to recognize the limitations of these estimates. Unlike traditional pensions, the projected “pension” is not guaranteed and depends on factors such as market performance and withdrawal strategies. Nonetheless, it offers valuable insight for individuals who partially or fully depend on self-funded retirement savings,. This tool should be regarded as an essential resource for managing self-funded retirement savings.

Instructions for Using the Retirement Savings Tracker

1. Entering Savings Information:
   • Add your current retirement account savings under the “Your Retirement Savings Accounts” section.
   • For each account:
     • Enter the account name in the first column.
     • Enter the account balance in the “Amount” column.
   • The tool will automatically calculate your Current Total Savings by summing up all account balances.
2. Understanding the Inputs:
   • Current Age:
     • Enter your current age.
   • Expected Retirement Age:
     • Enter the age at which you plan to retire. The tool calculates the number of years left to save based on the difference between this age and your current age.
   • Expected Annual Return (%):
     • Estimate the average annual return rate of your investments until retirement. Example: If your savings grow by 6% per year, input “6”.
   • Inflation Input: 
     • Enter the expected annual inflation rate (e.g., 2.5%). This input will be used to calculate the inflation-adjusted value of your savings at retirement.
   • Annual Withdrawal Rate (%):
     • This is the percentage of your total retirement savings you plan to withdraw annually after retirement.
     • Common practice (4% rule): Withdrawing 4% of your savings per year helps maintain your portfolio over time.
3. Output Information:
   • Expected Total Savings at Retirement:
     • Shows the estimated amount you’ll have saved by your expected retirement age, based on your current savings, expected returns, and remaining years to save.
   • Inflation-Adjusted Total Savings:
     • This shows the future savings balance expressed in today’s dollar equivalent value, which has been adjusted based on the inflation rate you entered.
   • Your Estimated ‘Pension’:
     • Calculated based on the Annual Withdrawal Rate. Example:
       • If your savings at retirement are $100,000 and your withdrawal rate is 4%, your annual pension would be $4,000.
   • Inflation-Adjusted Estimated ‘Pension’: 
     • This estimates the potential annual income your retirement savings could provide in today’s dollar equivalent value, which has been adjusted based on the inflation rate you entered.
4. Relationship Between Withdrawal Rate and ‘Pension’:
   • The higher the Annual Withdrawal Rate, the higher your yearly pension, but it may deplete your savings faster.
   • The lower the rate, the more sustainable your savings will be, though it results in a smaller annual pension.
5. Privacy Options:
   • To protect your privacy, you can use obfuscated savings numbers instead of the actual amounts. For example, you can enter 1/100th of your savings or any other scaled-down figure. The results will still be proportionally accurate, as the tool focuses on the relationship between savings, growth rate, withdrawal rate, and retirement age.
6. Saving Data:
   • Log in to save your input data for future tracking and adjustments.
7. Adjustments:
   • Update your savings information yearly and revise inputs (age, return rate, etc.) as needed to get updated projections.

Why Tracking Your ‘Pension’ Progress Is Crucial for 401(k) and Self-Funded Retirement Plan Investors

The shift from traditional pensions to self-funded retirement plans like 401(k)s has fundamentally changed how private-sector workers plan for retirement. Historically, many employees in both the private and public sectors relied on defined benefit pensions, which guaranteed lifetime income based on salary and years of service. However, as companies faced rising costs and longer employee life expectancies, private-sector employers began replacing pensions with defined contribution plans, such as the 401(k), introduced in 1978 as a tax-advantaged savings tool. The motivation behind the 401(k) was to give Americans the freedom of choice to plan and manage their retirement savings according to their unique needs and goals, offering flexibility and control over their financial futures.

Since its inception, it has become clear that many Americans have struggled to manage their retirement savings effectively. Today, most private-sector workers rely on a mix of 401(k) plans, taxable savings, and Social Security to meet their financial needs in retirement. However, many fall short of saving enough to maintain their pre-retirement standard of living. For instance, Bloomberg reported that Generation X, aged 44 to 59 in 2024, has been caught in the middle of this major shift toward self-directed retirement savings and is falling behind on retirement goals. This widespread lack of preparedness highlights the urgent need for comprehensive financial education and accessible tools to help individuals set investment strategies, achieve savings goals, and adopt sustainable withdrawal practices. Without these resources, the flexibility of the 401(k) risks leaving many retirees financially vulnerable.

That’s why it is essential for Americans to treat their retirement savings—whether in 401(k)s, IRAs, or other plans—as their retirement livelihood and diligently monitor its progress. By regularly tracking contributions, investment growth, and projected outcomes, individuals can develop a clearer sense of their estimated “pension” during retirement and make informed decisions to stay on track. Recognizing the critical need for such tools, we created the Retirement Savings Tracker specifically to empower individuals for this purpose. 

The Challenge for Self-Funded Retirement Investors

1. No Guaranteed Income:
   • Unlike traditional pensions, 401(k)s and IRAs are defined-contribution plans that don’t guarantee fixed monthly payments in retirement.
   • Your retirement income depends entirely on how much you save, how well your investments perform, and how sustainably you withdraw funds.
2. Longevity Risk:
   • Many retirees underestimate how long they’ll live, leading to the risk of outliving their savings.
   • Without a clear understanding of how much you can sustainably withdraw each year, it’s easy to overspend early or fall short later.
3. Market Volatility:
   • Self-funded investors are subject to market fluctuations, which can affect portfolio values right before or during retirement.
4. Complex Calculations:
   • Determining how much you need to save and how long your savings will last requires a detailed understanding of compounding growth, withdrawal rates, and investment returns.

Why Tracking ‘Pension’ Progress Matters

1. Understanding Sustainable Income:
   • A Retirement Savings Tracker translates your total retirement savings into an annual “pension-like” income.
   • By using assumptions such as a 4% withdrawal rate, you can estimate how much money you can withdraw yearly without depleting your savings too quickly.
2. Setting Clear Goals:
   • Knowing how much you’ll need in retirement allows you to set specific savings goals.
   • Tracking your current savings against projected retirement needs ensures you stay on track to meet your goals.
3. Motivates Consistent Contributions:
   • Seeing the progress of your retirement savings as a growing “pension” motivates you to contribute more regularly to your 401(k), IRA, or other accounts.
4. Adjusting for Life Changes:
   • A Retirement Savings Tracker allows you to adjust for:
     • Changes in retirement age.
     • Adjusted annual withdrawal rates.
     • Updated expected returns based on market trends or asset allocation.
   • This flexibility ensures your plan evolves with your financial situation.

Key Benefits for 401(k) and Self-Funded Investors

1. Visualizing Retirement Readiness:
   • The tool converts abstract savings numbers into something tangible: how much annual income you can generate.
   • This makes retirement planning more relatable and actionable.
2. Focusing on Growth and Safety:
   • By tracking your savings against expected returns and withdrawal rates, you can balance growth-oriented investments with safe, income-generating assets.
3. Avoiding Common Pitfalls:
   • Many self-funded investors rely on guesswork, which can lead to under-saving or overestimating returns.
   • Tracking your progress provides data-driven insights to guide your decisions.
4. Preparing for Tax Implications:
   • Withdrawing from a 401(k) or IRA involves taxes. Knowing your projected income helps you prepare for and minimize tax liabilities.

How the Retirement Savings Tracker Works

1. Input Your Details:
   • Add your current savings from retirement accounts like 401(k)s, IRAs, or other plans.
   • Enter assumptions such as your current age, expected retirement age, annual return rate, and desired withdrawal rate.
2. Calculate Your Progress:
   • The tool projects your total savings at retirement based on the number of years left to save and the compounding growth of your investments.
   • It estimates how much annual income you can generate sustainably.
3. Adjust and Monitor:
   • Update your inputs yearly to reflect changes in savings, returns, or goals.
   • Use the tool to make mid-course corrections, such as increasing contributions or adjusting retirement age.

Conclusion

For 401(k) investors and those without traditional pensions, retirement planning requires careful management of savings, investments, and withdrawals. A Retirement Savings Tracker simplifies this process, giving you a clear view of your progress and helping you make informed decisions. By thinking of your savings as a “self-funded pension,” you can better plan for the retirement lifestyle you want while avoiding the risk of running out of money.