How this works
Retirement planning math is just compound interest with monthly contributions, but the time horizons are long enough that small input differences produce dramatically different end balances. The calculator runs the standard future-value-of-an-annuity formula month by month: starting balance grows by the monthly return, then a contribution is added, then the next month repeats. Over 30-40 years that simple loop turns disciplined saving into life-changing money — but it also means delayed starts cost a lot more than people expect. The biggest single lever is your contribution rate, not your investment return. A 7% portfolio return is roughly the post-WWII US stock market average; you can't reliably push it higher without taking on more risk than retirement money should bear. But you control how much you save: going from 5% of salary to 15% of salary is a tripling of contributions and the end balance roughly triples too. Most retirement-planning advice converges on "aim to save 15% of pre-tax income from your first job onwards"; if you can't hit that, prioritise capturing your full employer match (which is 100% return on the matched portion — there is no investment that beats this), then ramp the rest as cash flow allows. A few practical points. (1) Inflation eats nominal returns. A 7% nominal return at 3% inflation is a 4% real return; over 40 years, that's the difference between 15× growth and 5× growth on the original principal. The calculator runs in nominal dollars (or euros, etc.), so when you plan, mentally discount the end balance by ~30-40% to get its purchasing power in today's money. (2) The "4% safe withdrawal rule" — derived from the Trinity Study of US market history — says you can withdraw 4% of your retirement balance in year 1, adjust by inflation each year after, and have a 95%+ chance of not running out over a 30-year retirement. So a $1M nest egg supports about $40k/year, or $3,300/month, in today's purchasing power. The calculator surfaces this number explicitly. (3) Tax treatment varies enormously by country. In the US: 401k/Traditional IRA are pre-tax (you pay tax on withdrawals); Roth IRA/Roth 401k are post-tax (no tax on withdrawals). Inside an account, returns compound tax-free. This calculator is tax-agnostic — it shows pre-tax balances; for after-tax, multiply by (1 − your retirement marginal tax rate) for traditional accounts, leave Roth balances as-is.
The formula
P is your current retirement balance. C is the total monthly contribution including any employer match (the calculator computes match from your salary and match policy). r is the monthly rate, derived from your assumed annual return — 7% nominal is a defensible long-run number for a diversified equity-heavy portfolio. n is the number of months between today and retirement. The 4% safe-withdrawal rule comes from the Trinity Study and assumes a 30-year retirement; for longer retirements (early retirement at 50, etc.) use 3.0-3.5%; for shorter retirements (retiring at 70), 5% is defensible.
Example calculation
- Age 30, retire at 65 (35 years). Current balance: $40,000. Salary: $80,000. Contribute 10% ($667/mo); employer matches 50% up to 6% ($200/mo). Expected return: 7%.
- Total monthly contribution C = $667 + $200 = $867. Monthly rate r = 0.07/12 ≈ 0.5833%. Months n = 35 × 12 = 420.
- FV ≈ 40,000 × 11.0 + 867 × 1,719 ≈ $440,000 + $1,491,000 ≈ $1.93 M.
- Safe monthly income at 4%: 1.93 M × 0.04 / 12 ≈ $6,400/month (in nominal future dollars).
Frequently asked questions
How much should I be saving for retirement?
The standard advice is 15% of pre-tax income, including any employer match — and to start as soon as you have any income at all, even if you can only do 5%. The reason 15% is the consensus: at a 7% real return, 15% from 25-65 reaches roughly 11× annual income at retirement, which is enough to replace 75-80% of pre-retirement income for 30 years using the 4% rule. If you start at 35, you need to save closer to 25% to hit the same target. If you start at 45, you need to save 40%+. The math is brutal but the corollary is liberating: every dollar invested at 25 does the work of three at 45, so saving even small amounts in your 20s pays off enormously. Below the 15% target, capture your full employer match first (it's 100% return on the matched portion) before any other savings priority.
What return assumption should I use?
6-7% nominal is the conservative-to-defensible range for a diversified, equity-heavy portfolio over a 30+ year horizon. The S&P 500's long-run nominal return since 1928 is about 10%, but that includes peak periods most planners don't want to count on. Subtract 1-2% for fund fees, suboptimal asset allocation, and behavioural drag (selling at lows, buying at highs), and you land at 6-7%. If you're investing in a target-date fund or 60/40 stock/bond split, lean toward 6%. If you're 100% global equities and disciplined about not selling in downturns, 7% is defensible. Don't plug in 10% — that's an upper bound that historically only happens in specific decade-long stretches, and over-projecting will quietly leave you under-saved.
Is the 4% rule really safe?
It's reasonably safe for a 30-year retirement on a diversified US-style portfolio (Trinity Study, 1998), with about a 95% historical success rate at 4% withdrawal. Caveats: (1) Trinity used pre-2000 data; later updates by Wade Pfau and Michael Kitces, plus international data showing lower long-run equity returns outside the US, suggest 3.5% is more defensible globally. (2) The rule assumes a 30-year horizon; for FIRE-style early retirements (40-year horizon or longer), drop to 3.0-3.25%. (3) Sequence-of-returns risk matters enormously — a bear market in your first 5 retirement years can permanently dent your portfolio, even if average returns are fine. Strategies like cash buffers, dynamic withdrawals (cutting spending in down years) and bond ladders mitigate this. (4) For shorter horizons (retiring at 70+, or known limited life expectancy), 5% can work. The calculator surfaces 4% as a default reference; treat it as a conversation starter, not gospel.
Does this account for taxes?
No — the calculator is tax-agnostic. It shows pre-tax balances and pre-tax retirement income. Tax treatment varies dramatically by country and account type, so building a single one-size-fits-all model would either be misleading for most users or hopelessly complex. Practical adjustments: for US Traditional 401k/IRA balances, multiply by (1 − your retirement marginal rate, often 15-25%) to get after-tax purchasing power. For Roth IRA/401k, balances are already after-tax — no adjustment needed. UK SIPP / EU pension wrappers / Japanese iDeCo all have their own rules; consult a tax-aware retirement planner or use country-specific tooling for the final mile. The pre-tax projection here is still useful: it tells you whether your savings rate is in the right ballpark, and the relative comparisons between scenarios (more contribution, longer horizon) are independent of tax treatment.