Retirement Calculator

About the Retirement Calculator

Projects the future value of your retirement accounts using compound growth on your current balance plus a stream of annual contributions.

How to use this calculator

1. Enter your current retirement savings as the starting amount \(P\).
2. Enter your regular contribution amount \(C\), along with how often you contribute and how many periods you want to project.
3. Enter the expected return rate \(r\) per period and the number of periods \(n\).
4. Review the projected future value \(FV\), then compare scenarios to see how changes in savings or returns affect the result.

The formula explained

The formula computes the future value \(FV\) of your current balance plus the future value of a stream of equal contributions. The first part grows your starting savings, and the second part grows each contribution over time.

• FV = future value, the projected retirement balance after \(n\) periods
• P = current retirement savings or starting balance
• r = return rate per period, written as a decimal
• n = number of periods you are projecting
• C = regular contribution amount made each period

Step by step method

1. Start with your current balance \(P\) and grow it by \((1+r)^n\).
2. Find the growth of your regular contributions using \(C\frac{(1+r)^n-1}{r}\).
3. Add the two parts together to get \(FV\).

Worked example

Problem. You have \(\$20,000\) saved now, you add \(\$500\) at the end of each year, and you expect a yearly return of \(6\%\) for \(20\) years. What is the projected retirement balance?

1. Convert the rate to a decimal, so \(r=0.06\), and identify \(P=20000\), \(C=500\), and \(n=20\).
2. Compute the growth factor, \((1.06)^{20} \approx 3.2071\). Then calculate the starting balance part, \(20000 \times 3.2071 \approx 64142\).
3. Compute the contribution part, \(500\frac{3.2071-1}{0.06} \approx 18392.5\). Add both parts, \(64142+18392.5 \approx 82534.5\).

Tips and common mistakes

• Make sure \(r\) is entered as a decimal, so \(6\%\) becomes \(0.06\).
• If your contributions are monthly but your return rate is annual, convert both to the same time period before using the formula.

Frequently asked questions