How the retirement projection works
The calculator simulates your account one month at a time. Each month the existing balance grows by the monthly rate, then your contribution is added at the end of that month:
balance = balance × (1 + r) + C
Here r is the expected annual return divided by 12 (so 7% becomes 0.5833% per month), and C is the monthly contribution. This repeats for 12 × (retirement age − current age) months. The inflation-adjusted figure then divides the final balance by (1 + inflation)^years to express it in today's purchasing power. Contributions stay flat in nominal terms, with no annual raises.
Worked example
You are 30, retire at 65 (35 years, 420 months), have 20,000 saved, contribute 500 a month and assume a 7% return and 3% inflation.
- Growth factor: (1 + 0.07/12)^420 is about 11.505
- Starting balance grows to about 20,000 × 11.505 = 230,100
- Contributions grow to about 500 × (11.505 − 1) ÷ 0.005833 = 900,450
- Nest egg: about 1,130,650, of which 230,000 was contributed
- Inflation factor: 1.03^35 is about 2.814, so in today's money that is about 401,800
The gap between 1.13 million and 402,000 is the point of the second number. A large balance in 35 years buys much less than the same figure today.
How much the assumptions matter
Using the same inputs but changing only the return or the retirement age:
| Scenario | Nest egg (nominal) |
|---|---|
| 5% return, retire at 65 | about 682,700 |
| 7% return, retire at 65 | about 1,130,650 |
| 9% return, retire at 65 | about 1,932,200 |
| 7% return, retire at 60 | about 772,300 |
| 7% return, retire at 70 | about 1,638,600 |
Five extra working years add roughly 500,000 here, because the last years compound the largest balance.
What it does not model
- Withdrawals. It stops at retirement age. It does not estimate how long the money lasts or a safe withdrawal rate.
- Taxes and fees. The return you enter should be net of fund fees. Account taxes, employer matches, Social Security and pensions are not included. Add an employer match to your monthly contribution yourself.
- Market volatility. A constant 7% differs from real returns, where a bad sequence of years near retirement matters more than the average.
For the underlying math see compound interest explained, or compare with the investment calculator and inflation calculator.