Planning calculator
Savings Goal Calculator
Set aside the money for a large planned cost, such as a car, a roof or a family trip, month by month in a named fund, so it never has to come from one large, badly timed withdrawal.
Pay for the Big Bills Before They Arrive
Why Pre-Fund a Large Cost in Retirement?
Because the way you pay for a large bill can cost more than the bill's price suggests. A $45,000 car bought with one withdrawal from a traditional IRA adds $45,000 to that year's taxable income. That can lift you into a higher bracket and, two years later, into a higher Medicare premium tier. The same car funded by monthly transfers over two years spreads the income across two tax years and leaves the rest of the plan alone.
Three things define any goal: the amount, the date you need it, and what you have already set aside. The interest rate matters less than people expect over a horizon of a few years. It moves the monthly figure by a few percent; the date moves it by half or more.
How the Monthly Amount Is Calculated
Take the goal, subtract what you already have (grown by interest until the deadline), and spread what is left across the months remaining, letting interest cover part of it.
Without interest: Monthly = (Goal − Saved) ÷ Months
With interest: Monthly = (Goal − Saved × (1 + i)n) × i ÷ ((1 + i)n − 1), where i is the monthly rate that compounds to your APY, (1 + APY)1/12 − 1, and n is the number of months
This is the future value of a series of monthly deposits, solved for the deposit. The calculator uses it in both directions: give it a deadline and it solves for the monthly amount; give it a monthly amount and it counts forward month by month until the balance reaches the goal. Deposits are assumed at the end of each month, with interest compounded monthly.
A useful test
Where Should the Monthly Amount Come From?
From the source that adds the least tax in the year you draw it. Still working, it is simply a transfer from each paycheck. Once retired, the monthly amount usually comes from one of four places:
- Spending you no longer need. Social Security or pension income above your regular bills can go straight to the goal fund each month.
- Dividends and interest from a taxable account, redirected from reinvestment to cash. They are taxed whether you reinvest them or not.
- A traditional IRA, as a small monthly or quarterly distribution. Every dollar is ordinary income, so spreading it across years keeps each year's total lower. Once required minimum distributions start (at 73, or 75 if you were born in 1960 or later), the goal can be funded from money you must withdraw anyway.
- A Roth IRA, whose qualified withdrawals are tax-free. Useful for a large goal in a year when other income is already high, though Roth money is often better left to grow longest.
Where to Keep the Money Until You Spend It
The right place depends on one question: can this goal survive a bad year in the market? For a cost with a date on it, the answer is no.
- Under 1 year: a high-yield savings account, a money market fund or Treasury bills. Treasury bill interest is exempt from state and local income tax, which helps in high-tax states.
- 1 to 3 years: a ladder of Treasury bills or CDs that mature before the date you need the money. Lock in a rate, but never past the date. The CD ladder calculator shows what each rung would earn.
- 3 to 5 years: mostly cash and short bonds. A small share in stocks only if the goal could wait a year or two.
- 5 years or more: this is usually part of the long-term portfolio rather than a dated goal. The compound interest calculator fits it better.
Why not stocks
Several Goals at Once: One Fund Each
Give each goal its own line and, ideally, its own account. A car fund, a home-repair fund, a travel fund and a gifts fund, each with its own monthly amount. When everything sits in one pot, each goal quietly borrows from the others and none is ever fully funded.
Run this calculator once per goal and add the monthly amounts. If the total is more than you want to set aside, the real question is which goal moves later, not whether to plan. Most banks and brokerages let you open several named accounts under one login at no cost.
Automate it. Schedule each transfer for the day your Social Security, pension or regular portfolio distribution arrives, so the money leaves before it is mixed with everyday spending.
When the Monthly Amount Is Too High
There are four levers, and the calculator shows each one:
- Move the date. Stretching the $45,000 goal from 24 to 36 months cuts the monthly amount from $1,371 to $885. The deadline table shows the effect at six dates.
- Trim the goal. A $40,000 car instead of a $45,000 one is about $200 a month less over two years.
- Start with more. Money already set aside earns interest for the whole period, so a lump sum at the start does more than the same amount spread out.
- Earn a better rate. Moving from a checking account to Treasury bills or a money market fund helps, but it is the smallest lever of the four.
Avoid These Costly Mistakes
- Taking a large one-off IRA withdrawal for a cost you could see coming two years ahead
- Keeping money for a dated cost in stocks
- Forgetting that the price of a car or a roof rises with inflation
- Mixing several goals in one account so none is ever fully funded
- Using the retirement cash reserve for a planned purchase, then having no cushion when markets fall
- Choosing a date so close that the plan is abandoned in month three
Your Savings Goal Plan
- 1List the large costs you expect in the next five years, with a rough amount and date for each
- 2Run the calculator once per goal, with inflation on for anything more than two years away
- 3Adjust dates until the combined monthly total fits your income and withdrawal plan
- 4Open a named account for each goal, in Treasury bills, a money market fund or CDs
- 5Schedule the transfers for the day your regular income or distribution arrives
- 6Re-run the numbers each year, and before any year with unusually high income
Illustrative example: the people and figures below are hypothetical, not real clients. Numbers are calculated from the stated assumptions.
A Car and a Roof, Paid For Without a Tax Spike
Two Bills Two Years Out
Ray, 69, a retired civil engineer, and Linda, 66, a retired school principal, have $1.9 million invested, most of it in traditional IRAs, a paid-off house, a pension and Social Security. Their modified adjusted gross income runs about $180,000 a year. Two large costs are coming: a replacement car in about two years, likely $45,000, and a new roof in about 18 months, quoted at $30,000. They already have $10,000 set aside for the car.
Their First Plan: One Withdrawal
- Take $65,000 from Ray's IRA in the year the bills arrive
- Income that year: about $245,000
- Above the $218,000 joint threshold for the first Medicare IRMAA tier (2026 figures)
- Two years later, each pays $284.10 a month for Part B instead of $202.90, plus a $14.50 Part D surcharge
- Cost of the surcharge: about $2,300 for the year, on top of the higher income tax
The Plan They Chose: Two Funds
- Car: $45,000 in 24 months from $10,000 at 4%: $1,371 a month
- Roof: $30,000 in 18 months from nothing at 4%: $1,621 a month
- About $2,990 a month for 18 months, then $1,371 for six
- Funded by a monthly IRA distribution of about $31,000 a year
- Income each year: about $211,000, under the first IRMAA threshold
What Made the Difference
1. Seeing the Costs Early
Neither bill was a surprise. The car was nine years old and the roofer had given them two summers. Once each cost had an amount and a date, the calculator turned it into a monthly figure they could fund from the IRA distributions they were already taking.
2. Keeping Each Year's Income Level
Medicare premiums are set from the tax return two years earlier (CMS, 2026). One large withdrawal would have lifted a single year's income by $65,000; spreading it lifted each of two years by about $31,000 and kept both under the threshold. Thresholds and premiums change every year, so they check the current figures each autumn.
3. Two Accounts, Two Names
Each fund sits in its own money market account, named "Car" and "Roof." Their two-year cash reserve for market downturns stays separate and untouched. When the roofer asked for a deposit early, it came from the roof fund, not the reserve.
The monthly amount was never the hard part; they could have written the checks from savings. The value of the plan was deciding in advance which year the income would land in.
Plan your own goal
Why Plan Large Costs in Retirement?
Because in retirement, how you pay for a large cost can matter as much as the cost itself. While you are working, a new car comes out of savings built from a paycheck. In retirement, most money comes out of accounts with tax attached: a traditional IRA or 401(k), where every dollar is ordinary income, or a taxable account, where selling may realize gains. A cost you can see two years ahead can be spread across two tax years. A cost paid in one lump lands in one.
The Medicare premium is where this shows most clearly. Part B and Part D premiums rise in steps, called IRMAA, once modified adjusted gross income passes a threshold, and they are set from the tax return two years before. In 2026 the standard Part B premium is $202.90 a month, and the first surcharge tier, above $218,000 of joint income or $109,000 single, raises it to $284.10 per person (CMS, 2026). A one-off withdrawal that crosses a threshold by a single dollar costs the full step for a year. Our Medicare and IRMAA guide lists every tier.
None of this means large purchases are a problem. It means they are worth scheduling. A fund for each cost, filled month by month from income you already receive or distributions you already take, keeps each year's income close to its usual level and leaves the long-term portfolio and the cash reserve alone.
Which Costs Are Worth a Separate Fund?
Anything large, predictable in rough size, and irregular in timing. Regular monthly bills belong in the budget; a fund is for the cost that comes every five or ten years and would otherwise be met with a single large withdrawal.
- Cars. Most households replace one every eight to twelve years. Knowing the approximate year makes the monthly amount easy to find.
- The house. Roofs, heating and cooling systems, windows and exterior paint, plus changes that let you stay at home longer: a walk-in shower, wider doorways, a bedroom on the main floor.
- Health costs Medicare leaves to you. Original Medicare does not cover most dental care, dentures, hearing aids or eye exams for glasses (Medicare.gov). A crown and an implant, or a pair of hearing aids, can each run to thousands of dollars. Our Healthcare Cost Estimator covers the recurring costs.
- Family. A wedding, a milestone trip with children and grandchildren, help with a grandchild's tuition. Tuition paid directly to a school does not count against the annual gift exclusion; other gifts above it need a gift tax return even when no tax is due. Our guide to gifting to children and grandchildren explains the rules.
- Travel. The large trips of the early retirement years, often front-loaded while health allows.
How Do Goal Funds Fit the Withdrawal Plan?
They are part of your yearly withdrawal, not something added on top of it. If you plan to draw $80,000 a year from the portfolio and $15,000 of it goes into goal funds, your everyday spending is $65,000. Counting the funds this way keeps the withdrawal rate honest: the car still comes out of the portfolio, just in smaller, planned amounts.
The order in which you draw from accounts matters too. In years with lower income, before Social Security starts or before required minimum distributions begin at 73, or 75 if you were born in 1960 or later, IRA withdrawals may be taxed at a lower rate than they will be later, so filling goal funds from the IRA can make sense. In years when income is already high, a taxable account or a Roth IRA may be the better source. Our guide to retirement withdrawal order works through the sequence, and the Retirement Withdrawal Calculator tests whether the total draw is sustainable.
Finally, keep each goal fund separate from the cash reserve. The reserve, sized with the Emergency Fund Calculator, is there so a bad market never forces a sale; a goal fund is there to be spent on a known date. When one fund quietly pays for the other, the reserve is short at exactly the wrong moment.
How this calculator works
Method and assumptions
- Interest compounds monthly at the rate that adds up to your APY over a year, (1 + APY)^(1/12) − 1, and each deposit goes in at the end of the month.
- "How much per month?" grows what you have already saved to the deadline, then finds the level monthly deposit that covers the rest: shortfall × i ÷ ((1 + i)^months − 1), where i is the monthly rate. At 0% it is simply the shortfall ÷ months.
- In "How much per month?", with "Adjust goal for inflation" on, the goal is first raised by your inflation rate, compounded yearly over the time to goal: goal × (1 + inflation)^(months ÷ 12).
- "When will I get there?" adds your monthly deposit and a month of interest until the balance reaches the goal, stopping at 100 years. With the inflation adjustment on, the goal rises with prices each month while you save, so the date reflects what the goal will cost when you get there.
- The comparison rows rerun the same formula at 0% (a checking account) and 7%, a round long-run stock figure, not a forecast.
What it leaves out
- Tax on the interest is not deducted, and the rate is held steady; savings rates change, and an investment account can fall in value before your date.
- Deposits are level: raising them over time, or one-off additions, are not modeled.
- Inflation, when you turn it on, is one steady rate you choose. The prices of cars, roofs and trips can rise faster or slower than that.
Sources
Methodology reviewed · For education, not individual advice