Pension Calculator

Why every figure here comes in two versions

A retirement projection that reports only nominal amounts is close to useless, and this is the single most common flaw in the calculators you will find. If you are 30 and saving $500 a month, a tool might tell you that you will have $854,732 at 65. That number is arithmetically correct at a 5% return. It is also meaningless, because $854,732 in 2061 is not $854,732 today.

At 2.5% inflation, the purchasing power of a dollar falls by about 58% over 35 years. The $854,732 becomes roughly $360,000 in today’s money — and the monthly income it supports is $1,201 in today’s money, not the $2,849 the nominal figure suggests. Those are the same projection, described two ways, and only one of them tells you whether you can retire.

So this tool shows both everywhere: the pot, the monthly income, and every row of the year-by-year table. The two columns are not a nicety. The real column is the one to make decisions with, and the nominal column is there because it is the one that will appear on your statement.

Where the 4% rule comes from and why it is not a law

The 4% figure comes from a 1998 study at Trinity University, which asked a narrower question than most people assume: for a portfolio split between stocks and bonds, what is the largest first-year withdrawal that would have survived every 30-year period in US market history without running out? The answer was about 4%.

Two things about that result get lost. First, it is a historical worst case over a fixed 30-year horizon, not a sustainable rate forever, and the authors have said as much repeatedly. Second, it comes from a specific asset mix, a specific country and a specific century, and it assumes no fees and no taxes.

This calculator takes a different approach, and it is worth being explicit about the trade-off. Rather than replaying historical sequences, it assumes a constant real return and solves the annuity equation: given a pot and a fixed real withdrawal, how many months until the balance reaches zero? That is transparent and easy to check, and it is exactly what you can verify against the year-by-year table.

The cost is that a constant-return model has no sequence risk. Real markets do not deliver their average return every year; they deliver bad years and good years in an order you do not control, and bad years early in retirement do far more damage than the same bad years later, because the money withdrawn at the bottom never gets to recover. The practical consequence: in the default example the model says a 4% withdrawal lasts 38 years, but the historical record suggests treating 4% as the boundary rather than the target, and 3% as the safer planning number.

The tool makes this easy to see. In the default projection, dropping the withdrawal rate from 4% to 3.5% extends the pot from 38 years to 48; going to 5% cuts it to 27. The rate you pick matters more than anything else on the page except the return.

Inflation is the variable people underestimate

Return gets all the attention, but the real return — return minus inflation — is what determines your income, and it moves much less than either input because the two partly cancel. Notice what the same projection does under different assumptions:

• At a 5% return and 2.5% inflation, the real return is 2.44%, and $500 a month turns into $1,201 a month of income in today’s money.
• Raise the return to 7% and the real return becomes 4.39% — above the withdrawal rate, so the pot stops depleting and the income rises to $2,073 in today’s money. Nothing else about the plan changed.
• Raise inflation to 4% instead, and while the nominal pot is unaffected, the income in today’s money falls from $1,201 to $722 — a 40% cut from a single input, and the years the pot lasts drop from 38 to 29.

The two levers are time and contributions, in that order

Starting five years earlier and retiring five years later both add five years of compounding, and in the default example they produce identical results: $1,404 a month in today’s money either way. That equivalence is worth sitting with, because one of those levers is available to you today and the other requires someone else’s agreement.

Adding $200 a month — a 40% increase in contributions — raises the income from $1,201 to $1,520. Real, but a 27% gain for a 40% increase in what you pay in, because the new money has less time to compound than the money already in the pot. This is the arithmetic behind the standard advice to start early: it is not a platitude, it is the shape of the function.

The contributions line on the results panel is worth looking at honestly. In the default example you pay in $260,000 including the starting balance, and the remaining $595,000 is growth. Over a long horizon, most of a retirement pot is growth. That is also why the projection is fragile: it is mostly a statement about returns, not about your discipline.

The China employee pension tab

The second tab calculates the statutory pension under 职工基本养老保险, which is a different kind of calculation: a defined-benefit formula rather than a savings account, and one where the rules changed in 2025. It is there for anyone working in China, and for anyone comparing a Chinese career against a career somewhere else.

The pension has two parts added together. The basic pension is 社平工资 × (1 + your average contribution index) ÷ 2 × years of contributions × 1%. The individual-account pension is your account balance divided by a fixed divisor set by your retirement age — 139 months at 60, 170 at 55, 195 at 50.

That divisor is the most misunderstood number in the system, and it is worth stating plainly: it is the divisor used to compute the monthly amount, not a limit on how long you get paid. The account is a bookkeeping device; when it is exhausted, the pension continues from the pooled fund for as long as you live.

The retirement age itself now depends on your date of birth. The 2024 reform replaced the flat ages with a schedule: men move from 60 to 63, women from 55 to 58 and from 50 to 55, by one month of retirement age for every four months of birth date (every two months for the 50-to-55 group). Birth dates from 1977 onward for men, and 1982 or 1985 for the two groups of women, already reach the new ages. Flexible retirement allows up to three years earlier — never below the old statutory age — or up to three years later.