Retirement Calculator

The two forces that build a retirement balance

A retirement portfolio grows from two streams: the money you add and the money your investments earn on top of it. The second stream is the powerful one, because returns compound — each year's gains themselves earn returns the following year. This projector takes your current age, target retirement age, existing savings, monthly contribution, expected annual return, and an inflation rate, then shows where compounding lands you. Every figure is computed in your browser; nothing is transmitted.

The future-value formula

The projected balance is the sum of two standard finance formulas. Your existing savings grow as a lump sum, and your monthly deposits grow as an annuity:

balance = savings × (1 + r)ⁿ + monthly × [((1 + i)ᵐ − 1) ÷ i]

Here r is the annual return and n the number of years for the lump-sum part, while i is the monthly rate (annual return ÷ 12) and m the number of months for the contribution part. The tool applies returns annually to the starting balance and monthly to the contributions, which is a reasonable convention for a planning estimate.

A worked example

Take the defaults: age 30 retiring at 65 (35 years), $10,000 saved, $500 per month, 7% return. The lump sum grows to 10,000 × 1.07³⁵ ≈ $106,700. The contributions, with a monthly rate of about 0.583%, grow to roughly 500 × [(1.00583⁴²⁰ − 1) ÷ 0.00583] ≈ $860,000. Together that's around $967,000 at retirement. You contributed only 10,000 + 500 × 420 = $220,000 of that — meaning roughly three-quarters of the final balance is investment gains, not your own deposits. That ratio is the single most motivating number in retirement planning, and the SVG chart makes it visual by stacking contributions (blue) beneath total balance (green) year by year.

Why "real value" matters more than the headline

A million dollars in 35 years will not buy what a million buys today. The tool divides the future balance by (1 + inflation)ⁿ to express it in today's purchasing power. At 3% inflation over 35 years, that roughly $967,000 shrinks to about 967,000 ÷ 1.03³⁵ ≈ $343,000 in today's dollars. Both numbers are true; the real-value figure is the one to plan your lifestyle around, because it answers "what will this actually feel like to spend?"

The 4% rule for turning a balance into income

The income estimate uses the 4% rule, a well-known guideline suggesting you can withdraw 4% of your portfolio in the first year of retirement with a high chance of not running out over about 30 years. The tool computes balance × 0.04 ÷ 12 for a monthly figure, and does the same on the real value so you can see your spending power in today's terms. A shortcut: dividing your balance by 25 gives the same annual number. So a $1,000,000 balance supports roughly $40,000 a year, or about $3,300 a month, before inflation.

How to use it well

• Be conservative with the return. A diversified stock portfolio has historically returned around 7–10% before inflation, but the future is unknown. Running 6% and 8% brackets your likely outcome better than trusting one optimistic number.
• Test the cost of waiting. Move your current age up by five years and watch the balance fall sharply — that gap is the price of delaying, and it's almost always larger than people expect.
• Compare contribution levels. Bump the monthly amount by $100 and note how compounding magnifies a small, steady increase over decades.

Common mistakes and limits

• Ignoring inflation. Quoting the nominal balance and forgetting the real-value column makes the future look richer than it will feel.
• Assuming smooth returns. Real markets swing year to year; a constant 7% is an average, not a promise, and a bad sequence of early-retirement years can strain the 4% rule.
• Forgetting taxes and fees. The model is pre-tax and ignores account fees, both of which reduce what you actually keep.
• Treating 4% as guaranteed. It's a guideline derived from historical data, not a law; a longer retirement or a weak start may call for a lower withdrawal rate.