This works out what your savings will be worth on the day you stop working, and — more usefully — what that pot pays out each month once you start drawing on it. A six-figure balance is hard to size by eye; a monthly income is not.
Key terms
- Annual return — what your investments grow by each year on average. Not a savings account rate; a retirement pot is usually invested.
- Withdrawal rate — the share of the pot you take each year in retirement. It decides how long the money lasts.
- Returns add — the part of the final balance you did not pay in. In a long retirement plan this is usually the larger half.
How it works
Every month the balance grows by one month of return and then your contribution is added. Repeating that from your age today to the age you want to retire gives the balance, and the withdrawal rate turns it into an income.
Month by month
balance = balance × (1 + i) + deposit
i is the annual return divided by twelve, repeated once for every month between the two ages. Monthly income is the final balance × withdrawal rate ÷ 12.
Time does more of the work than the amount
Saving $500 a month at 6% from 30 to 60 produces about $502,000, of which $180,000 is yours and roughly $322,000 is return. Start the same $500 a month at 40 instead and the pot is closer to $232,000 — less than half, for two-thirds of the contributions. The decade you lose is the decade the earliest money would have compounded longest.
The withdrawal rate is an assumption, not a promise
4% is a common planning figure, not a guaranteed payment. Markets do not deliver an average return every year, and the order in which good and bad years arrive matters once you are withdrawing rather than saving. Treat the monthly income as a target to plan around and revisit it as retirement approaches — which is why the rate is a field you can change rather than a number baked into the answer.
How to use this calculator
- Enter your age now and the age you want to retire.
- Enter what you have already saved across pensions and retirement accounts.
- Enter what you add each month, including anything an employer contributes.
- Set the return you expect, then open the income assumption to change the withdrawal rate. Read the monthly income rather than the balance — it is the figure you can compare with what you spend today.
Frequently asked questions
What annual return should I use?
Something you can defend rather than something that makes the answer look good. A pot invested in shares has historically returned more than one held in cash, but with years of falls along the way. Running the calculation twice, once optimistic and once pessimistic, is more informative than a single number.
Does this account for inflation?
No — every figure is in today’s dollars at today’s prices. A pot of $500,000 in thirty years will not buy what $500,000 buys now. One way to handle it is to enter a return a few points lower than you expect, which reads the answer back in today’s money.
Should I include my employer’s contribution?
Yes, if you expect to keep receiving it. Add it to the monthly figure. An employer match is the largest single boost most retirement plans get, and leaving it out understates the pot badly.
What if I am starting late?
Contributions have to do the work that compounding would otherwise have done, so the monthly figure matters more than it would have at 25. Delaying retirement by even two or three years helps twice over: more years of paying in, and fewer years the pot has to cover.
Is the monthly income before or after tax?
Before. How retirement income is taxed depends on the type of account and where you live, so the calculator stops at the gross figure rather than guessing at rules that vary by person.
