Retirement Calculator
Editorial Review
Reviewed for formula accuracy, plain-language explanations, and calculator limitations by DP Tech Studio.
Reference sources
Important: This calculator uses compound interest projections and does not account for inflation, taxes on withdrawals, Social Security income, or investment volatility. Results are illustrative estimates only.
What Does This Retirement Calculator Do?
This tool projects how much money you could accumulate by your target retirement age, given your current savings, monthly contributions, and an assumed average annual investment return. It uses the future value formula for compound interest — the same math that underpins every 401(k) projection illustration.
The goal is not a precise forecast — markets are unpredictable and life changes constantly. The goal is to give you a directional answer to the question everyone asks: "Am I on track?"
The Formula Behind the Numbers
The calculator computes two separate future values and adds them together:
FV₁ = Current Savings × (1 + r)ⁿ
Future Value of Monthly Contributions:
FV₂ = Monthly Contribution × ((1 + r)ⁿ − 1) / r
Total Projected Balance = FV₁ + FV₂
Where:
r = Monthly return rate (Annual rate ÷ 12 ÷ 100)
n = Months until retirement ((Retirement age − Current age) × 12)
Example: Starting at 30, Retiring at 65
Current Savings: $15,000
Monthly Contribution: $500
Expected Annual Return: 7%
FV of $15,000 at 7% for 35 years: ≈ $160,000
FV of $500/month at 7% for 35 years: ≈ $933,000
Total Projected Balance: ≈ $1,093,000
That result assumes consistent contributions and a steady 7% return, which no investment guarantees. But it illustrates how powerful the combination of time and regular contributions is — a principle financial planners call "the compounding effect."
What Annual Return Should You Use?
This is the question that most retirement calculators dodge. Here are the figures most financial planners reference as long-term historical benchmarks:
- All-stock portfolio (e.g. S&P 500 index fund): ~7% real return (inflation-adjusted) historically
- Balanced portfolio (60% stocks / 40% bonds): ~5–6% real return
- Conservative portfolio (more bonds, cash): ~3–4% real return
- High-yield savings / CDs only: 4–5.5% nominal (varies, and not inflation-adjusted)
Using 6–7% for a long-term stock-heavy retirement account is a reasonable planning assumption. Run your numbers at both 5% and 8% to see the range.
The 4% Rule: How Much Do You Need to Retire?
Once you know your projected balance, a common planning benchmark is the 4% rule: you can sustainably withdraw 4% of your portfolio annually in retirement without depleting it over a 30-year period. Based on historical market returns, this rule has held up well.
To use it: divide your desired annual retirement income by 0.04. For example:
- Want $50,000/year → need at least $1,250,000 saved
- Want $80,000/year → need at least $2,000,000 saved
Compare that target to your projected balance from this calculator, then adjust your monthly contributions to close any gap.