Retirement income calculator, with California taxes

One number decides most retirement plans: the gap between the bills and the guaranteed income

Retirement planning gets complicated when it starts with products. It gets simple when it starts with a subtraction: the expenses that must be paid every month for the rest of your life, minus the income that is guaranteed to arrive every month for the rest of your life. If the second number covers the first, the rest of your savings can stay flexible. If it does not, the difference is the only figure any product should ever be sized to.

Sources and as-of dates for every figure above

A calculator that will not show its sources is asking to be trusted rather than checked. Every default and every rate this tool applies is a published figure, listed here with the organisation that published it and the date it was published. Where a figure goes stale on a known schedule, that is noted too.

Figure	Value used	Source and date
Average Social Security retired-worker benefit	$2,071/mo single, $3,208/mo couple	SSA 2026 COLA Fact Sheet, 24 Oct 2025. Changes with the 2027 COLA, expected mid-October 2026
Average household spending	$5,119/mo at 65+, $7,079/mo at 55–64	BLS Consumer Expenditure Survey 2024, released 19 Dec 2025. Annual figures divided by 12
California tax rate schedule	2025 Schedules X and Y, 1%–12.3%	FTB 2025 California Tax Rate Schedules
California standard deduction	$5,706 single, $11,412 joint	FTB standard deduction, 2025
California exemption credit	$153 each, doubled at 65 and over	FTB 2025 Form 540, lines 7 and 9
Safe starting withdrawal rate	3.9%	Morningstar, The State of Retirement Income: 2025, 3 Dec 2025 (data as of 30 Sep 2025). 30-year horizon, 90% success. Updated annually
Life expectancy at each age	SSA period life table	SSA period life table, 2023 data. Updates with each Trustees Report
Social Security trust fund	OASI depletion Q4 2032, 78% payable after	2026 Social Security Trustees Report summary, read 8 Sep 2026

Two limits worth stating plainly. The tool models California income tax only: federal tax depends on provisional income and filing status, and unlike California it taxes part of Social Security for many households. And it applies the California schedule to the guaranteed income on screen only — part-time work, IRA withdrawals and interest would all push a household further up the same schedule.

What counts as guaranteed for life

Only income that arrives whether or not markets cooperate: Social Security, a defined-benefit pension such as CalPERS or CalSTRS, and any annuity income you already own. Not a withdrawal rate from a portfolio, not dividends, not rent from a property you may sell. The calculator treats annuity income as fully taxable, which is correct for a contract bought with pre-tax rollover money; a non-qualified annuity bought with money already taxed returns part of each payment as principal, and only the earnings portion is taxed. Enter the pension figure after the survivor option you intend to elect, because that election permanently changes the amount, and enter Social Security at the age you actually plan to claim; the Social Security Administration shows your own figures at each age, and claiming later raises them permanently.

Why California changes the arithmetic

Most retirement calculators are built for a national audience and apply one blended tax rate, or none at all. California is different enough that the blend misleads in both directions. The state does not tax Social Security at all, which is more generous than the federal treatment. It then fully taxes pension income, IRA and 401(k) withdrawals and the taxable portion of annuity payments as ordinary income, on a nine-bracket schedule running from 1% to 12.3%, plus a 1% Mental Health Services Tax above $1 million of income.

Run the numbers and the practical result surprises most people: a single retiree at 65 with a $2,000 monthly pension pays no California income tax at all, because the $5,706 standard deduction and the exemption credits — which double at 65 — absorb it. The state's bite only starts to show on larger pensions. A couple with a $6,000 monthly pension pays roughly $45 a month. That is a real advantage for retirees here, and it is also a reason not to assume the federal bill is as gentle.

This matters most for the households this county is full of: a career CalPERS or CalSTRS pension is large enough to reach the brackets where California starts to take a visible share, while a household living mainly on Social Security may owe the state nothing. See public employees for how the pension side works, and the 401(k) withdrawal tax calculator for what a lump-sum withdrawal costs.

Why the tool shows you a reduced Social Security figure

Because the Trustees say so. The 2026 Social Security Trustees Report projects that the Old-Age and Survivors Insurance trust fund's reserves deplete in the fourth quarter of 2032, a quarter earlier than the previous report, after which 78% of scheduled benefits are payable from incoming taxes unless Congress acts. Congress has acted before and may well act again, and no one should plan on a 22% cut as a certainty. But a calculator that quietly assumes 100% for life is presenting one side of a projection its own source does not make, so the reduced figure sits next to the main result rather than in a footnote.

Filling a gap, in order of what it costs you

1. Delay Social Security if you can. It is inflation-adjusted, government-backed lifetime income that California does not tax, and the only way to buy more of it is to wait. Bridging the wait with savings is often the best use of a lump sum.
2. Choose the pension option deliberately. A survivor option lowers the monthly amount and protects the household; the election is generally permanent, and it belongs in this worksheet before any product does.
3. Consider an income annuity for what remains, and only what remains. An immediate or deferred income annuity converts part of a lump sum into a payment for life. It comes with real limits: the money is no longer liquid, most deferred contracts carry surrender charges for years, withdrawals above a free amount are charged, and indexed contracts cap the interest credited. See immediate income annuities and the annuities overview.
4. Keep the rest flexible. Emergency reserves, the roof, the car and travel money belong outside any contract. What those savings should be invested in is a question for a registered investment adviser; we are licensed for insurance, not investments.

What this calculator does not model

Federal income tax, which for many households taxes part of Social Security and is the larger bill. Inflation, which raises the expense side every year while a fixed pension or annuity payment stays flat and Social Security adjusts. Health shocks and long-term care, which can dwarf every other line; the California Department of Insurance's senior information guides cover that insurance neutrally. And the sequence of market returns, which matters for money you are drawing down and is the real reason to have essentials covered by guaranteed income rather than by a good year.

Related: our income planning page walks through the full worksheet, public employees covers CalPERS and CalSTRS, and 401(k) rollover options covers what to do with an old plan.

Questions people ask about this calculator

Reviewed by Roberto Morales, California Insurance License #0G97165. Next Wave Options is licensed for life and annuity products only and does not provide investment, tax or legal advice.