Retirement Savings
Long-term savings projection
About This Calculator
The retirement savings calculator projects how much your nest egg will grow based on current savings, regular contributions, investment returns, and time horizon. It helps answer the fundamental question: 'Will I have enough to retire?' and shows how changes in savings rate, return, or retirement age dramatically affect the outcome.
Formula
FV = PV×(1+r)ⁿ + PMT×((1+r)ⁿ−1)/r
FV = future value, PV = current savings, PMT = monthly contribution, r = monthly rate, n = months
Safe withdrawal rate: Annual income = Portfolio × 4% (the '4% rule')
Example Calculation
Age 30, $15,000 saved, adding $500/month, 7% annual return, retire at 65
- n = 35 years = 420 months; r = 0.07/12 = 0.005833
- FV = 15000×(1.005833)⁴²⁰ + 500×((1.005833)⁴²⁰−1)/0.005833
- FV = 15000×8.62 + 500×1321.5 = 129,300 + 660,750 = $790,050
Projected balance at 65: ~$790,000; supports ~$31,600/year withdrawal (4% rule)
Impact of Starting Age (7% return, $500/month contribution, retire at 65)
| Start Age | Years | Final Balance | Monthly Income (4%) |
|---|---|---|---|
| 25 | 40 | $1,312,000 | $4,373 |
| 30 | 35 | $875,000 | $2,917 |
| 35 | 30 | $567,000 | $1,890 |
| 40 | 25 | $349,000 | $1,163 |
| 45 | 20 | $204,000 | $680 |
Frequently Asked Questions
What is the 4% rule?
The 4% rule states that you can withdraw 4% of your portfolio in year 1 of retirement, then adjust for inflation each year, with a high probability of not outliving your money over 30 years. Based on historical stock/bond returns, a $1M portfolio supports ~$40,000/year.
How much do I need to retire?
A common rule of thumb: multiply your desired annual retirement income by 25 (the inverse of 4%). To spend $60,000/year, you need $1.5M. Adjust based on Social Security income, pension, desired lifestyle, and expected retirement length.
How important is starting early?
Extremely important due to compounding. Saving $500/month from age 25 to 35 (10 years only) then stopping grows to more than saving $500/month from age 35 to 65 (30 years continuously). Time in the market is more powerful than amount contributed.
What rate of return should I use?
Use a conservative estimate: 6-7% for a diversified stock/bond portfolio. 100% stocks have historically returned ~10% before inflation. Subtract 1-2% for fees and inflation to get a real return. Being conservative means pleasant surprises rather than shortfalls.