Retirement Calculator

Retirement planning answers two core questions: “How much will I have when I retire?” and “Is that enough to live on?” This calculator handles both.

Two Pieces of Math

Future value of your current savings:

FV = PV × (1 + r)^n

Future value of monthly contributions:

FV = PMT × ((1 + r)^n − 1) / r

Where:

• PV = current savings balance (what you have today)
• PMT = monthly contribution
• r = monthly return rate (annual return ÷ 12)
• n = number of months until retirement

The calculator combines both — your existing money compounds, while your monthly deposits stack on top.

The 4% Rule

The 4% Rule (developed by financial planner William Bengen in 1994) says you can withdraw 4% of your retirement portfolio in year one, then adjust for inflation each year after, with about a 95% chance the money lasts 30 years. Studies based on historical US market returns back this up.

The simple version:

Annual retirement income ≈ Nest egg × 4% Or: Target nest egg = Annual expenses × 25

A $1,000,000 portfolio supports roughly $40,000/year ($3,333/month) before taxes.

If you want $80,000/year, you need a $2 million nest egg.

The 4% Rule is conservative for retirements shorter than 30 years and slightly aggressive for ones longer than 35 years. Some planners use 3.5% for early retirement (40+ years).

Worked Example

Current age: 30. Current savings: $25,000. Monthly contribution: $500. Expected return: 7%/year. Retirement age: 65.

• Years to retirement: 35 (n = 420 months, r = 0.5833%/month)
• Future value of current $25,000: $25,000 × (1.07)^35 = $266,925
• Future value of $500/month: $500 × ((1.005833)^420 − 1) / 0.005833 = $903,073
• Total nest egg: ~$1,170,000
• Annual income at 4%: ~$46,800
• Monthly income: ~$3,900

Three Big Levers

In rough order of impact:

1. Time — Starting at 25 instead of 35 with the same monthly contribution roughly doubles your final balance. Starting earlier almost always beats contributing more later.
2. Employer match — A typical 401(k) match (50% on the first 6% of salary) is essentially a 50% instant return on those contributions. Always max the match before anything else.
3. Account type — Tax-advantaged accounts compound faster because you’re not paying yearly taxes on gains. 401(k) is employer-sponsored; IRA (Individual Retirement Account) is personal; Roth versions of either let you withdraw tax-free in retirement.

Caveats

This calculator does not adjust for inflation in the projection itself — the future-value number is in today’s dollars only if your “expected return” is the real return (after inflation). Historical US stock market real return is roughly 7%; nominal return is closer to 10%. If you used 7%, your number is in today’s purchasing power. If you used 10%, divide by inflation factor (about 2x over 25 years at 3% inflation) for a realistic view.