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Retirement Income Gap Worksheet
HOW DO I CALCULATE MY RETIREMENT INCOME GAP?Add up the money that will come in each month in retirement, then subtract what you expect to spend each month, including one twelfth of yearly bills like property tax and repairs. If spending is higher, the difference is your monthly income gap. Multiply it by 12 for the yearly gap your savings or other income must cover.
Private by design. The math runs in your browser. Your numbers are not sent, stored or logged. Reload the page and they are gone.
How to use it
- Pick the currency you will spend in.
- Enter your monthly income. Leave blank any line that does not apply.
- Enter your essential and flexible monthly costs.
- Enter yearly or irregular costs as yearly totals. The worksheet divides each one by 12.
- Press Calculate and read each result with its plain explanation.
- Print a copy if you want one. Nothing is kept after you leave.
Your worksheet
Your results USD
- Total monthly income
- Not calculated
- Essential monthly costs
- Not calculated
- Flexible monthly costs
- Not calculated
- Yearly costs, monthly share
- Not calculated
- Total monthly spending
- Not calculated
- Monthly income gap
- Not calculated
- Essential gap
- Not calculated
- Essential costs covered by guaranteed income
- Not calculated
- Yearly gap
- Not calculated
Everything that comes in each month from the income lines.
Bills you must pay each month, before yearly costs.
Spending you could cut in a bad year.
Your yearly and irregular costs divided by 12, so they show up in the monthly budget instead of surprising you.
Essential plus flexible plus the monthly share of yearly costs.
Total monthly income minus total monthly spending. A shortfall is what savings, more work or spending cuts must cover each month. A surplus is money left over.
Guaranteed income (Social Security, pensions, annuities) minus essential costs, including the monthly share of property tax, repairs and yearly insurance. A shortfall here means your must-pay bills depend on savings or work.
The share of essential costs that guaranteed income pays. 100% or more means your floor is covered even if markets fall or work stops.
The monthly gap times 12. This is the yearly amount your savings or other income must cover, in today's money.
This worksheet adds and subtracts the numbers you enter. It is not a prediction of investment performance, does not certify that you are ready to retire, and is not financial, tax or investment advice. Results are rounded to whole units for display.
Printed from theretirementdecisionlab.com/worksheet/. Education only.
Worked example Illustrative
A made-up couple, in US dollars. These numbers are for illustration only. They are not typical, recommended or a forecast.
| Line | Amount |
|---|---|
| Social Security | $2,200 a month |
| Pension | $800 a month |
| Part-time work | $500 a month |
| Total monthly income | $3,500 (guaranteed part: $3,000) |
| Essential costs | Housing $1,400, utilities $250, food $600, health $500, transportation $300, insurance $150, debt $150, taxes $200 |
| Essential monthly costs | $3,550 |
| Flexible costs | Travel $200, dining $150, family $100, hobbies $50 |
| Flexible monthly costs | $500 |
| Yearly costs | Property tax $2,400, repairs $1,800, yearly insurance $1,200, travel $1,500, gifts $600. Total $7,500 a year. |
| Yearly costs, monthly share | $7,500 / 12 = $625 (essential part: $5,400 / 12 = $450) |
| Total monthly spending | $3,550 + $500 + $625 = $4,675 |
| Monthly income gap | $3,500 minus $4,675 = $1,175 short each month |
| Essential gap | $3,000 guaranteed minus ($3,550 + $450 = $4,000) = $1,000 short |
| Covered by guaranteed income | $3,000 / $4,000 = 75% |
| Yearly gap | $1,175 x 12 = $14,100 a year |
What it means: this couple needs $14,100 a year from savings, more work or lower spending. Guaranteed income covers three quarters of their must-pay bills, so a bad market year would touch essentials, not only travel.
Assumptions and limits
- One month, in today's money. The worksheet does not add inflation, raises or cost-of-living adjustments.
- No investment returns. It does not predict how your savings will grow or how long they will last.
- Taxes are yours to estimate. It does not calculate tax. Enter what you expect to set aside.
- Guaranteed income means Social Security, pensions and annuities. Part-time work, rent and other income can stop, so they count toward total income only.
- Yearly costs are spread evenly. In real life they arrive in lumps, so keep cash on hand for the months they land.
- One currency, no exchange rates. If your income is in dollars and your costs are in another currency, convert at a rate you choose before you enter numbers, and test a weaker rate too.
- Not a readiness check. A surplus here does not certify that you can retire. It is a starting point for a decision, not the decision.
Questions
What counts as guaranteed income?
Social Security, pensions and annuities. These keep paying whether markets rise or fall. Part-time work, rental income and other income count toward your total income, but not toward guaranteed income, because they can stop.
Does the worksheet convert currencies?
No. Pick the currency you will spend in and enter every amount in that currency. The currency choice changes the labels and number format only. The worksheet does not fetch or apply exchange rates.
Is my financial information saved or sent anywhere?
No. The math runs in your browser. Your numbers are not sent, stored or logged. When you close or reload the page, they are gone. Print the page if you want a copy.
What should I do if I have a gap?
A gap is what your savings, more work or spending changes must cover each month. Check first whether guaranteed income covers your essential costs. Then decide which flexible costs you would cut in a bad year. The related answers on this page show how to turn a yearly gap into a savings target.
A gap is a number. What you do about it is a decision.
In four live sessions you work through when, whether and where to retire on your own income and costs, in the currency you will actually spend. Led by Todd Allyn, 24 years teaching economics and finance. Not a financial advisor.
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