Retirement Savings Calculator
Projects the total nest egg you'll have at retirement based on your current savings, monthly contributions, and a 7% annual growth rate. Use it when planning how much to save each month to hit a retirement target.
About this calculator
This calculator combines two components of retirement wealth: the future value of your existing savings and the future value of your ongoing monthly contributions. The formula is: FV = currentSavings × (1.07)^n + monthlyContribution × 12 × ((1.07)^n − 1) / 0.07, where n = retirementAge − currentAge. The first term compounds your current lump sum at 7% per year. The second term treats your annual contributions (monthly × 12) as an ordinary annuity and sums their compounded growth. The 7% rate approximates the long-run average real return of a diversified stock portfolio. Understanding this formula helps you see how starting early dramatically amplifies your final balance through compound interest.
How to use
Suppose you are 30 years old, plan to retire at 65, have $20,000 saved, and contribute $500/month. n = 65 − 30 = 35 years. Step 1: FV of current savings = $20,000 × (1.07)^35 = $20,000 × 10.677 = $213,540. Step 2: Annual contribution = $500 × 12 = $6,000. FV of contributions = $6,000 × ((1.07)^35 − 1) / 0.07 = $6,000 × 138.237 = $829,422. Step 3: Total = $213,540 + $829,422 = $1,042,962. Enter your own numbers to see your projected balance.
Frequently asked questions
What annual return rate does this retirement savings calculator assume?
The calculator uses a fixed 7% annual growth rate, which approximates the historical long-run average return of a broadly diversified stock portfolio after inflation adjustments are set aside. In practice, your actual returns will vary year to year depending on your asset allocation. Conservative portfolios with more bonds will likely grow more slowly, while equity-heavy portfolios may grow faster but with more volatility. You should treat the result as a planning estimate, not a guarantee.
How does starting to save earlier affect my retirement balance?
Starting earlier has a profound effect because of compound interest — your earnings generate their own earnings over time. For example, saving $500/month from age 25 to 65 at 7% yields roughly $1.32 million, while the same contribution from age 35 yields only about $606,000. That ten-year difference nearly doubles the outcome. The formula's exponent n (years until retirement) is the key driver: even small increases in n produce large jumps in the final balance.
Why does the calculator use annual contributions instead of monthly compounding for contributions?
The formula multiplies monthly contributions by 12 to get an annual figure and then applies annual compounding. This is a simplified annuity approximation that slightly underestimates the balance compared to true monthly compounding, but the difference is small over long horizons. For a rough planning tool it is entirely adequate. If you need precise monthly-compounded results, a more detailed compound interest calculator with monthly periods would give a marginally higher figure.