The formula
How it works
Estimate how large your retirement savings will grow by the time you retire, from what you have now plus regular monthly contributions. The calculator also gives a rough monthly income that pot could provide, using the well-known 4% rule.
FAQ
What is the 4% rule?
A rule of thumb that you can withdraw about 4% of your retirement savings in the first year, then adjust for inflation, and have a good chance of the money lasting 30 years. The calculator uses it to turn your nest egg into an estimated monthly income.
Should I use a return before or after inflation?
For a picture in today’s money, use a “real” return — your expected return minus inflation, perhaps 4–5%. Using the full nominal return gives a larger figure that will not stretch as far once prices have risen.
How much difference does starting earlier make?
A lot — money contributed in your 20s and 30s has decades to compound, so it can end up contributing more growth than larger amounts saved later. Delaying by even five or ten years can shrink the final nest egg substantially at the same contribution rate.
Does this include Social Security or a pension?
No, the projection only covers the savings you enter here — current balance plus monthly contributions growing at your assumed return. Add any expected Social Security or pension income separately when judging whether you will have enough.
What if my employer matches contributions?
Include the match in the monthly contribution figure, since it grows alongside your own money. Employer matching is effectively free return on top of your own savings rate, so it is worth contributing at least enough to capture it in full.
How much should I plan to save each month?
A common guideline is to save 10–15% of income for retirement, but the right number depends on your age, target retirement date and desired income. Try a few monthly contribution amounts in the calculator to see how each changes your projected nest egg.
Is a 7% annual return realistic?
It is a common long-run average for a diversified stock-heavy portfolio before inflation, but actual returns vary widely year to year and depend on your asset mix. Try a lower rate as well to see a more conservative estimate.
About the retirement calculator
This calculator projects how much your retirement savings could grow by the time you stop working, and roughly what monthly income that pot might provide. It combines what you have already saved with your regular monthly contributions and lets them compound at an assumed return until your chosen retirement age. Seeing both the final nest egg and the income it could generate helps you judge whether you are on track.
How to use it
Enter your current age and the age you plan to retire, your current savings, how much you add each month, and the annual return you expect. The calculator shows the projected value of your savings at retirement and an estimated monthly income from it. For example, a 30-year-old with $20,000 saved, adding $500 a month at 7% until 65, could build a pot of over $1.1 million and draw roughly $3,700 a month.
The formula
The nest egg is the future value of your current savings plus the future value of your monthly contributions: , where is current savings, is the monthly contribution, is the monthly return and is the number of months to retirement. The estimated retirement income applies the 4% rule: .
Where it is used
People use it to check whether their current saving rate will fund the retirement they want, and to see how contributing a little more, or retiring a little later, changes the outcome. Financial advisers use similar projections to build retirement plans, and the same maths sits behind pension and 401(k) forecasts. Because small changes compound over decades, running the numbers early is one of the most valuable financial habits.