How to Calculate Retirement Savings
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Figuring out how much money you'll have at retirement comes down to a handful of inputs: how much you've already saved, how much you add each month, how many years you have left, and the rate of return you expect on your investments.
The basic idea: compound growth
Retirement calculators, including the one on this site, typically project your balance using compound growth: your existing savings and every future contribution earn a return, and then that return itself earns a return in future years. This "future value of an annuity" approach is the same standard methodology used by investor-education tools like the U.S. Securities and Exchange Commission's investor.gov compound interest calculator.
The inputs that move the needle most
- Time horizon. The number of years between now and retirement has an outsized effect, because compounding needs time to work.
- Monthly contribution. Consistent contributions, even modest ones, add up significantly over decades.
- Expected rate of return. Small differences in assumed return compound into large differences in projected balance over long horizons — which is also why it's worth stress-testing your plan with a conservative estimate, not just an optimistic one.
- Employer match. If your employer matches part of your contribution, that match is effectively an immediate return on your own contribution and should be included in any projection.
Try it yourself
Use the retirement calculator on this site to plug in your own numbers and see a live projection, including a breakdown of how much of your future balance comes from your own contributions versus investment growth.
This article is for general education only and is not individualized financial advice. Consult a qualified financial professional for guidance specific to your situation.