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Retirement Savings Calculator
Use this free retirement savings calculator to see how your nest egg grows between now and retirement. Enter your current age and retirement age, what you have saved already, what you can contribute each month, and the return you expect — and the calculator shows the balance at retirement, how much of it came from your contributions versus investment growth, and the monthly income that nest egg could support.
| Figure | Amount |
|---|---|
| Your contributions | $220,000 |
| Investment growth | $795,589 |
| Nest egg at retirement | $1,015,589 |
| Value in today's dollars | $360,923 |
| Annual retirement income | $40,624 |
| Monthly retirement income | $3,385 |
How it works
The calculator uses the future value formula, the same math behind compound interest. Your current savings grow at the expected return for every month until retirement, and each monthly contribution starts growing from the month you make it. With monthly compounding, the monthly rate is the annual return divided by 12, and the number of months is the years until retirement times 12. A 30-year-old retiring at 65 has 35 years, or 420 months, for compounding to work — and that long runway is why the growth figure ends up far larger than the contributions.
There are two parts to the final balance. The first is the growth of what you already have: current savings multiplied by one plus the monthly rate, raised to the power of the number of months. The second is the future value of all your monthly contributions: the monthly amount multiplied by the annuity factor, which is one plus the monthly rate raised to the number of months, minus one, all divided by the monthly rate. Add the two parts together and you get the nest egg at retirement. With $10,000 saved, $500 a month, and a 7 percent return over 420 months, the first part grows to about $115,000 and the contributions grow to about $900,000, for a total of $1,015,589.
r = annual return ÷ compounding periods per year · n = years to retirement × periods per year
The calculator also shows what the nest egg is worth in today's dollars, because $1,015,589 in 35 years will not buy what $1,015,589 buys today. At 3 percent inflation, prices roughly triple over 35 years, so that nest egg has the buying power of about $360,000 in today's dollars. That is not a reason to be discouraged — your contributions and your salary will also rise with inflation over the same period — but it is the honest way to judge whether the number is enough, and it is why the calculator shows both figures side by side.
For retirement income, the calculator uses the withdrawal rate you choose, defaulting to the well-known 4 percent rule: withdraw 4 percent of the nest egg in the first year of retirement, then adjust that amount for inflation each year after. On $1,015,589, that is $40,624 in the first year, or about $3,385 a month. The 4 percent rule comes from research on how long a diversified portfolio lasts, and it is a planning guide, not a guarantee — a 3 percent rate is safer and lasts longer, while 5 percent gives more income now but risks running out sooner.
Worked example
A 30-year-old has $10,000 saved, contributes $500 a month, expects a 7 percent annual return with monthly compounding, and plans to retire at 65. Inflation is assumed at 3 percent.
Step 1: Time — 65 − 30 = 35 years, or 420 months. The monthly rate is 7% ÷ 12 = 0.5833%.
Step 2: Growth of current savings — $10,000 × (1 + 0.07/12)^420 = $10,000 × 11.55 = about $115,523.
Step 3: Growth of contributions — $500 × (((1 + 0.07/12)^420 − 1) ÷ (0.07/12)) = $500 × 1,800.13 = about $900,066.
Step 4: Nest egg — $115,523 + $900,066 = $1,015,589.
Step 5: Contributions paid in — $10,000 + ($500 × 420) = $220,000, so investment growth is $1,015,589 − $220,000 = $795,589.
Step 6: Income — 4% of $1,015,589 = $40,624 a year, or about $3,385 a month. In today's dollars the nest egg is worth about $360,000.
The striking part is Step 5: growth contributes $795,589, more than three times the $220,000 actually paid in. That is compound interest doing the heavy lifting — and it is also why starting ten years earlier matters more than contributing a little more each month.
FAQ
How much will I have saved by retirement?
It depends on how much you already have, how much you add each month, your return, and how many years you have left. A 30-year-old with $10,000 saved who contributes $500 a month at a 7 percent annual return would have about $1,015,589 by age 65.
How much monthly income will my retirement savings provide?
A common rule of thumb is the 4 percent rule: withdraw 4 percent of your nest egg in the first year of retirement, then adjust for inflation. A $1,015,589 nest egg would provide about $40,624 in the first year, or about $3,385 per month.
What annual return should I assume for retirement planning?
A diversified stock-heavy portfolio has historically returned about 7 percent a year after inflation is ignored, and about 10 percent before inflation. Many planners use 6 to 7 percent as a planning assumption. A more conservative portfolio of bonds and stocks might use 4 to 5 percent. No return is guaranteed.
Does starting early really matter that much?
Yes, more than the monthly amount. Starting at 25 instead of 35 with the same $500 monthly contribution at 7 percent gives you roughly twice as much by 65, because the extra ten years let compound growth do most of the work. In the worked example, investment growth contributes far more than the contributions themselves.
What is the difference between nominal and inflation-adjusted results?
The nominal figure is the dollar amount you will actually have, while the inflation-adjusted figure shows what that amount is worth in today's dollars. At 3 percent inflation over 35 years, $1,015,589 has the buying power of about $360,000 in today's dollars, which is why the calculator shows both.