Retirement Calculator
This retirement calculator projects how large your nest egg will grow by your target retirement age and then checks it against the income you hope to draw. It compounds your current savings and monthly contributions month by month at your expected return, applies the 4% safe-withdrawal rule to estimate sustainable monthly income, and compares your projected balance against the savings you would need to fund your desired lifestyle. The output is a single readiness snapshot: balance, sustainable income, and any shortfall.
Formula
Balance = S·(1+i)^m + C·((1+i)^m − 1)/i; Sustainable = Balance × 4% ÷ 12; Need = Desired × 12 × 25
- S
- Current savings (lump sum) today
- C
- Monthly contribution added at the end of each month
- i
- Monthly return = expected annual return ÷ 12 ÷ 100
- m
- Months to retirement = (retirement age − current age) × 12
- Need
- Nest egg required under the 4% rule for the desired income
How it works
- Set your Current Age and Retirement Age sliders (18-80) to fix the number of years your money has to grow.
- Enter Current Savings, Monthly Contribution, and Desired Monthly Income, and set the Expected Return slider (0%-15% in 0.1% steps).
- The tool compounds the lump sum and the monthly contributions to a Balance at Retirement, multiplies it by 4% ÷ 12 for Sustainable Monthly Income, and computes a Savings Gap as the shortfall against a nest egg equal to desired income × 12 × 25.
Worked example
Age 30 retiring at 65 with $50,000 saved, $1,000/mo contributions, 7% return, wanting $5,000/mo in retirement.
- Months m = (65 − 30) × 12 = 420; monthly return i = 7 ÷ 12 ÷ 100 = 0.0058333.
- Balance = 50,000 × 1.0058333^420 + 1,000 × (1.0058333^420 − 1) ÷ 0.0058333 ≈ $2,376,362.19.
- Sustainable income = 2,376,362.19 × 0.04 ÷ 12 = $7,921.21; required nest egg = 5,000 × 12 × 25 = $1,500,000.
Projected balance about $2,376,362.19, sustainable income about $7,921.21/mo, and a savings gap of $0 since the goal is already exceeded.
Frequently asked questions
- What is the 4% rule used here?
- The 4% rule estimates that you can withdraw 4% of your nest egg in the first year of retirement and keep pace with inflation without running out over roughly 30 years. This tool uses it to convert your balance into a sustainable monthly income.
- How is the savings gap calculated?
- It inverts the 4% rule: the nest egg you need equals your desired monthly income times 12 times 25. The gap is that target minus your projected balance, floored at zero, so a $0 gap means you are on track to fund the income you want.
- Are contributions added before or after growth each month?
- Contributions are treated as an ordinary annuity, added at the end of each month, so the most recent contribution earns no return in the month it is made. This is the standard, slightly conservative convention for projecting savings.
- Does this adjust for inflation or taxes?
- The growth and income figures are in nominal dollars and ignore taxes. Returns and withdrawals from tax-deferred accounts are taxed on withdrawal, and inflation erodes purchasing power, so treat the readiness snapshot as a pre-tax, pre-inflation estimate.