Retirement Savings Calculator
What the retirement savings calculator does
The retirement savings calculator projects how much money you will have on the day you retire. It takes what you have saved now, what you add each month, how many years remain, and the annual return you expect, then compounds the balance month by month. The result is the projected future balance in today’s dollars only if you enter a return that is already adjusted for inflation; otherwise it is a nominal figure.
How the calculation works
Each month the tool adds your contribution to the balance and then applies one month of growth at the annual rate divided by 12:
Balancenext = (Balance + Contribution) × (1 + r / 12)
Repeating that for every month until retirement gives the same answer as the closed-form future value formula for an annuity due plus a lump sum:
FV = P × (1 + i)n + C × [((1 + i)n − 1) / i] × (1 + i)
where P is the current balance, C the monthly contribution, i the monthly rate and n the number of months.
Worked examples
| Current savings | Monthly | Years | Return | Projected balance | Of which contributions |
|---|---|---|---|---|---|
| $20,000 | $300 | 30 | 7% | $530,000 | $128,000 |
| $50,000 | $500 | 25 | 6% | $570,000 | $200,000 |
| $0 | $800 | 35 | 7% | $1,450,000 | $336,000 |
| $100,000 | $1,000 | 15 | 5% | $480,000 | $280,000 |
Figures are rounded to the nearest $10,000. In the third row, three quarters of the final balance is investment growth rather than money paid in, which is why starting early matters more than the size of the contribution.
Choosing a return rate
Historical averages are the usual reference. A broad U.S. stock index has returned roughly 10% a year before inflation over the long run, and about 7% after inflation. A 60/40 stock and bond mix has averaged closer to 8% nominal and 5% real. Enter a nominal rate if you want the balance in future dollars, or a real rate if you want to know what the money will buy at today’s prices. For planning, 5 to 7% is a common conservative range.
What a target balance means in income
A common rule of thumb is that a diversified portfolio can support annual withdrawals of about 4% of its starting value. On that basis, $530,000 supports roughly $21,000 a year, and $1,000,000 supports $40,000. Work backwards: if you want $50,000 a year from savings on top of any pension, aim for about $1.25 million. The retirement calculator takes age inputs instead of years, and the pension calculator covers defined-benefit income.
How to improve the projection
- Increase contributions with pay rises. Adding 1% of salary each year has a large effect over decades; run the calculator with a higher monthly figure to see it.
- Capture employer matching. A 50% match on the first 6% of salary is an immediate 50% return on that money.
- Keep fees low. A 1% annual fee on a 7% return cuts the final balance by roughly a quarter over 30 years.
- Do not stop contributing in downturns. Contributions made when prices are low buy more units.
Limits of the model
The calculator assumes a constant return every month, constant contributions and no taxes or fees. Real returns vary from year to year, and the order of good and bad years matters near retirement. Use the projection as a planning midpoint, run it again with a return two points lower to see a cautious case, and revisit it annually.
Related tools
The compound interest calculator shows the growth of a single lump sum. The future value calculator and investment growth calculator handle other contribution schedules. Track overall progress with the net worth calculator and net worth projection calculator.
External references
Frequently asked questions
Should I enter the return before or after inflation?
Either works, as long as you read the result the same way. A nominal return gives future dollars; a real return (nominal minus roughly 2.5 to 3% inflation) gives today’s purchasing power.
Does the calculator include taxes?
No. In a tax-advantaged account such as a 401(k) or IRA the projection is close to reality until withdrawal. In a taxable account, reduce the return by the tax you expect to pay on dividends and gains.
What if I plan to increase contributions later?
Run the calculator in stages: project the first period, then use that balance as the current savings for the next period with the higher contribution.
Is 7% a realistic return?
It is close to the long-run real return of a stock-heavy portfolio, but it is an average, not a promise. Balanced portfolios and shorter horizons justify a lower figure.
How much should I be saving?
A widely used guideline is 15% of gross income including any employer match, starting in your twenties. Starting later requires a higher rate; the calculator lets you test what closes the gap.