Retirement Savings Calculator
Project a retirement balance from monthly contributions.
Estimate your nest egg from current savings plus monthly contributions.
How the Math Works
The Retirement Savings Calculator uses the future value (FV) formula for compound interest with regular contributions: FV = PV(1+r)^n + PMT*((1+r)^n - 1)/r. Here, PV represents your current savings (present value), PMT is your monthly contribution, r is the annual interest rate divided by 12 (monthly rate), and n is the total number of months until retirement. The first term calculates how your existing savings grow through compounding, while the second term accounts for the growth of your monthly contributions, treated as an ordinary annuity. This formula assumes a fixed interest rate and consistent monthly deposits.
Practical Applications
To use this calculator, input your current retirement savings as PV, enter the amount you plan to contribute monthly (PMT), estimate your expected annual return rate (which we convert to a monthly rate for calculation), and specify your retirement timeline in years (converted to months for n). The tool will project your total savings at retirement, allowing you to test different scenarios—like increasing contributions or adjusting return assumptions—to see how variables impact your final balance and plan accordingly.
Day-to-Day Use
This calculator empowers you to make informed financial decisions by visualizing how small monthly savings and compound growth build substantial retirement funds over time. By testing different contribution levels or return rates, you can set realistic savings goals, prioritize budgeting, and understand the long-term benefits of starting early. It also reduces anxiety about retirement planning by providing concrete projections, helping you adjust your spending habits or investment strategies today to secure your financial future.
Worked example
$20k + $500/mo at 7% for 30 yr → ~$762,000.
FAQ
Inflation?
Use a lower 'real' return to express results in today's dollars.