How the Retirement Projection Works
The calculator starts with your current savings, adds your monthly contribution every month until your retirement age, and grows the balance at your expected annual return (applied monthly). The result is your projected nest egg at retirement.
Because a dollar in 30 years will not buy what it buys today, the calculator also shows an inflation-adjusted figure: the projected balance discounted back to today’s money using the inflation rate you enter. That second number is the one to compare with your current cost of living.
The 4% Withdrawal Rule
The monthly income estimate uses the widely cited 4% rule: withdraw 4% of your savings in the first year of retirement, then adjust that amount for inflation each year. Historical US market studies found this approach survived most 30-year retirements. It is a planning shortcut, not a guarantee — markets, fees and how long you live all affect whether it holds.
Monthly income ≈ Savings at retirement × 0.04 ÷ 12
Savings needed ≈ Annual spending × 25Worked Example
A 35-year-old with $50,000 saved who adds $600 a month and earns 7% a year would have about $1.14 million at 65. With 3% inflation, that is roughly $470,000 in today’s money. Using the 4% rule, the nest egg supports about $3,800 a month in the first year of retirement (in future dollars).
Levers That Change the Outcome Most
- Starting earlier: extra years of compounding are the most powerful input.
- Contribution size: raising contributions with each pay rise keeps savings growing without a noticeable lifestyle cut.
- Employer match: if your employer matches contributions, contributing enough to get the full match is effectively an instant return.
- Retirement age: working a few extra years both adds contributions and shortens the period your savings must cover.
- Fees: a 1% annual fee can reduce a 30-year balance by a quarter or more.
Choosing Sensible Assumptions
Use a return that matches your actual mix of investments — a portfolio mostly in bonds will not average stock-market returns. Many planners test several scenarios, such as 5%, 6% and 7%, to see a realistic range rather than a single number. Revisit the projection once a year and after major life changes.