Retirement Income Gap Calculator

Guaranteed income and portfolio income answer two different questions

Retirement income planning often gets reduced to a single large portfolio number, but that framing skips a genuinely useful first step: figuring out how much of your desired income is already covered by sources that do not depend on markets at all, before calculating how large a portfolio needs to be to cover the rest.

Social Security and a traditional pension, where you have one, both pay a predictable amount regardless of how investments perform and regardless of how long you live. Whatever income remains after those guaranteed sources — the gap — is what a portfolio actually needs to fund, and sizing that portfolio correctly starts with knowing that gap precisely rather than working from total desired income.

Why isolating guaranteed income changes the whole planning conversation

Two people with identical desired retirement incomes can have completely different portfolio requirements depending on how much of that income is already guaranteed. Someone with a substantial pension and two full Social Security benefits in a household may need a portfolio covering only a modest remaining gap. Someone without a pension, relying primarily on a single, more modest Social Security benefit, may need a portfolio covering the vast majority of their desired income.

This is why “how big does my retirement portfolio need to be” cannot be answered without first establishing guaranteed income — the same total desired income produces wildly different savings targets depending on that starting foundation.

Converting an annual gap into a lump sum target

Once the annual gap is known, translating it into an actual portfolio size requires an assumed sustainable withdrawal rate — the same concept behind the traditional FIRE number calculation, just applied to the gap rather than total expenses.

A 4% withdrawal rate implies needing 25 times the annual gap in savings, following the standard historically-derived guideline. A more conservative 3.5% rate, appropriate for a longer retirement horizon or simply a preference for more safety margin, implies needing closer to 29 times the gap instead — a meaningfully larger target for identical guaranteed income and identical desired spending. The safe withdrawal rate calculator goes deeper on why that rate choice matters as much as it does.

Gross figures hide two tax questions worth tracking separately

This calculator deliberately works in gross, pre-tax dollars for simplicity, which means two real tax considerations sit outside it and are worth addressing on their own.

A portion of Social Security benefits becomes taxable at the federal level once combined income — including other retirement withdrawals — crosses certain thresholds, meaning the “guaranteed” income side of this calculation is not entirely tax-free the way it might appear. And withdrawals from traditional retirement accounts to cover the gap are generally taxed as ordinary income when withdrawn, meaning the actual withdrawal needed to produce a given after-tax spending amount can be somewhat higher than the pre-tax gap this calculator computes. Both are worth layering onto this calculation once the basic gap and nest-egg figures are established.

Married couples should run guaranteed income at the household level

For a married couple, guaranteed income calculations get meaningfully more complex than simply adding two individual Social Security benefits, because spousal and survivor benefit rules can change what a couple actually receives depending on each spouse’s claiming decisions and earnings history.

The spousal Social Security benefit calculator covers how a lower-earning spouse’s benefit interacts with a higher earner’s record, which is often the piece of household guaranteed income that gets calculated incorrectly by simply assuming each spouse’s own benefit applies independently without checking whether the spousal benefit produces a higher figure.

What a positive or negative gap actually tells you to do next

A calculated gap of zero, meaning guaranteed income already covers desired spending, is a genuinely different planning situation than a substantial gap requiring a large portfolio — and it changes what additional savings are actually for. With no gap, further savings become discretionary margin rather than a strict requirement, freeing up decisions about spending now versus later, or about how much to prioritize leaving an inheritance.

With a meaningful gap and a shortfall between the nest egg needed and current savings, the useful next step is working backward from that shortfall to a required savings rate and timeline — which is exactly what the FIRE number calculator and a standard compound growth projection are built to answer once the target figure from this calculator is known.