Retirement Savings Calculator

How to use Retirement Calculator

1. 1
   Enter your age and target retirement age. The gap between them is the compounding period.
2. 2
   Add what you have saved and what you add monthly. Include employer contributions if you get them.
3. 3
   Set a return and an inflation rate. The inflation figure is what makes the result comparable to today's prices.

About calculating retirement savings

A retirement projection combines two calculations. What you have already saved compounds on its own for the whole period, and each future contribution compounds for however long remains after it is made — the first for decades, the last for a month. The annuity formula handles the second part, and adding the two gives a nominal balance at the target date. The nominal number is the one that gets quoted and the one that misleads. Inflation over a working lifetime is not a minor adjustment: at two and a half percent, prices roughly double every twenty-eight years, so a projection reaching a million in forty years describes purchasing power closer to three hundred and seventy thousand in current terms. Any projection that does not deflate its result is producing a figure that cannot be compared to a salary, a mortgage or a grocery bill, which is to say it cannot be compared to anything. The share of the final balance that comes from growth rather than contributions is the most informative single number here, because it shows whether compounding has had time to do its work. Early in a saving life almost everything in the account is money that was paid in. Given thirty or forty years, growth typically dominates — and that crossover is reached by time invested far more than by contribution size. A pound saved at twenty-five compounds for forty years; the same pound at forty-five compounds for twenty, and at six percent that difference is roughly threefold.

Frequently asked questions