How this works
Future value (FV) is the sum of compound interest on an initial deposit plus the future value of an annuity stream of contributions. The two pieces add: FV_total = FV_lump + FV_annuity. The lump-sum piece is just compound interest; the annuity piece is the standard formula PMT × ((1 + r)^n − 1) / r.
The big lever is time, not rate. A $5,000 deposit at 7% grows to $76,123 in 40 years; the same $5,000 at 5% reaches only $35,200 in 40 years — but at 7% over just 30 years it's $38,061, basically the same as 5% over 40. Doubling the contribution period roughly doubles the lump-sum return. Time-in-market is the most powerful variable, which is why retirement contributions starting at age 25 vs 35 have outsized impact.
The second-biggest lever is steady contributions. A 30-year-old who contributes $500/month at 7% retires at 65 with ~$876K. The same person contributing nothing but starting with $50K reaches only ~$534K. Recurring contributions, even small ones, dwarf one-time deposits over long horizons. Use this calculator to size your savings rate to a target nest egg, not to flatter your starting balance.
The formula
Match contribution frequency to compounding frequency for clean math. If you contribute monthly, set m = 12 and divide annual rate by 12. The formula assumes ordinary-annuity timing (payment at end of period).
Example calculation
- $5,000 initial, $300/month, 7% annual return, 30 years.
- Lump grows to $5,000 × 1.005833^360 ≈ $40,612. Annuity adds $300 × ((1.005833^360 − 1) / 0.005833) ≈ $365,991. Total ≈ $406,603.
Frequently asked questions
What return rate should I use for retirement planning?
Plan with 5–7% nominal real return for diversified equities (i.e. after-inflation expected return). Bonds add ballast at 1–2% real. A typical 70/30 stock/bond mix sits around 4.5–5.5% real. Subtract investment fees (a 1% expense ratio is significant over 40 years). Stress-test with a "bad case" of 4% to see how reliant your plan is on optimistic assumptions.
Why is the answer different from my brokerage projection?
Brokerage projections often (a) inflate the contribution by an assumed annual increase, (b) apply taxes or expense ratios, or (c) use a probabilistic model (Monte Carlo) instead of a deterministic compound formula. Our calculator shows the deterministic figure — given exactly these inputs, the future value is X. Use it as a clean baseline, then layer on tax assumptions and contribution growth in a spreadsheet if you need them.
What about inflation?
If you enter a real (after-inflation) return rate, the FV is in today's purchasing power and you can compare it directly to today's expenses. If you enter a nominal rate, the FV is in future dollars worth less than today's — divide by (1 + inflation)^n to convert back. Most retirement planners use real rates to avoid the conversion. Long-run US inflation has averaged ~3%, so subtract roughly 3 percentage points from a nominal rate to get real.