Retirement
Nest egg projection with inflation
Two engines run side by side here. Your existing balance compounds as a lump sum; your monthly contributions compound as an annuity. The two are added to give a nest egg, and then the whole thing is divided by cumulative inflation to show what it buys in today's money.
At the defaults — age 30, retiring at 65, $50,000 saved, $500 a month, 7% return, 2.5% inflation — the nest egg is about $1,475,800, of which $260,000 is money you put in. Deflated at 2.5% over 35 years, that balance has the purchasing power of roughly $621,874 today. The second number is the one that pays for groceries.
This is arithmetic on assumptions you supply, not a forecast and not investment advice. The section on what those assumptions get wrong is the most important part of this page.
Running the default 35-year projection
35 years is 420 months, and 7% annual is a monthly rate of 0.0058333:
- Growth factor:
(1.0058333)^420 = 11.506 - The existing $50,000 becomes
$575,308 - The $500-a-month stream becomes
500 x (11.506 - 1) / 0.0058333 = $900,527 - Nest egg: $1,475,835
- Total contributed:
$50,000 + (420 x $500) = $260,000. Growth:$1,215,835. - Divide by
1.025^35 = 2.373: $621,874 in today's dollars.
Applied to that balance, a 4% first-year withdrawal is about $59,000 in 2061 dollars — roughly $24,900 of today's purchasing power, before Social Security. Whether that is enough is not a question this calculator can answer, but it is the question it exists to make you ask.
What a ten-year head start is worth
$500 a month at 7%, starting from a zero balance, everyone stopping at 65:
| Start age | Years saving | Total contributed | Balance at 65 |
|---|---|---|---|
| 25 | 40 | $240,000 | ~$1,312,000 |
| 35 | 30 | $180,000 | ~$610,000 |
| 45 | 20 | $120,000 | ~$260,000 |
| 55 | 10 | $60,000 | ~$87,000 |
Starting at 25 rather than 35 costs $60,000 more in contributions and returns about $700,000 more at the end. The asymmetry runs the other way too, and it is brutal: to reach the 25-year-old's $1.31 million starting at 45 instead, the required contribution is roughly $2,520 a month rather than $500. Contribution size cannot buy back time at anything like an even exchange rate.
The four assumptions most likely to be wrong
1. A constant 7% every year. Real portfolios deliver an average through a sequence, and near the end the sequence matters more than the average. A 30% drawdown in year 34 lands on a balance of roughly $1,370,000 and costs about $411,000; the same 30% in year 4 lands on a balance of roughly $94,000 and costs about $28,000. Identical percentage, fifteen times the damage. Two people with identical 35-year averages can finish hundreds of thousands of dollars apart. This model has no variance in it and cannot show that.
2. A contribution frozen in nominal dollars. $500 a month in 2061 is about $211 of today's purchasing power at 2.5% inflation. If you intend to save a constant share of income, your dollar amount should rise every year and this projection understates you significantly.
3. No fees and no taxes. A 1% annual fee against a 7% gross return is a 6% net return. Same inputs at 6%: about $1,119,000, or $357,000 less. Fees compound against you on exactly the same curve that returns compound for you.
4. It stops on your retirement birthday. Nothing here models withdrawals, tax on distributions, required minimum distributions, Social Security, healthcare costs, or how long you live. The SSA's period life table linked below is the free starting point for that last one.
Two formulas, added, then deflated
Nest = C x (1 + r)^n + D x ((1 + r)^n - 1) / r
Real value = Nest / (1 + i)^Y
C is your current balance, D the end-of-month contribution, r the annual return divided by 12 and by 100, n the months between the two ages, i inflation as a decimal and Y the years.
Note the asymmetry: growth compounds monthly while inflation is discounted annually. Over 35 years that mismatch is immaterial next to the error in the 7% guess itself, but it is there.
One convention trap. Entering a real return such as 4.5% and leaving inflation at 0 gives the same answer in today's dollars as entering 7% with 2.5% inflation. Doing both — a real return and an inflation rate — discounts twice and understates your position by a third. Pick one convention and stay inside it.
The four numbers it reports
- Nest Egg at Retirement — nominal dollars on your retirement birthday.
- Total Contributions — opening balance plus every deposit, unadjusted for anything.
- Total Growth — nest egg minus contributions. This is what the compounding assumption produced, not a market prediction.
- Inflation-Adjusted Value — the nest egg expressed in today's purchasing power.
There is no employer-match field. If your employer matches 50% of the first 6% of an $80,000 salary, that is $200 a month of contribution you are not being charged for — add it to the monthly contribution box rather than leaving it out, because at these horizons it is worth about $360,000 in the final balance.
Questions this projection can and cannot settle
It answers comparative questions well. Is $200 more a month worth it? At the defaults it adds about $360,000. Does retiring at 62 rather than 65 cost more than the three years of contributions you skip? Yes, by a wide margin: the balance falls from $1,475,800 to about $1,180,800, so three years costs roughly $295,000 against $18,000 of foregone deposits. Those ratios hold up even though the underlying return assumption is a guess, because the guess is applied identically on both sides.
It answers absolute questions badly. It will not tell you what return to assume, how to allocate a portfolio, whether a Roth or a traditional account suits your tax situation, or whether $621,874 of real purchasing power is enough for the life you want.
Pair it with Compound Interest to see how sensitive the whole thing is to the rate, Savings Goal for shorter dated targets, and the Department of Labor's Savings Fitness workbook below for the parts arithmetic does not cover. Not investment advice.
Frequently asked questions
Why are the two headline numbers so far apart?
One is nominal and one is real. $1,475,800 is what the account statement would say in 2061; $621,874 is what that buys at today's prices if inflation runs 2.5%. Plan against the second.
What return should I assume?
There is no right answer. 6-7% nominal is a common assumption for a long-horizon equity-heavy portfolio, but the fee caveat above shows that a 1% fee turns 7% into 6% and costs $357,000 at these inputs. Run the projection at two or three rates rather than trusting one.
Does this model market crashes?
No. It applies one constant rate every month. Sequence-of-returns risk - the fact that a bad year just before retirement hurts far more than the same bad year at the start - is invisible to any single-rate projection, including this one.
Should I enter my employer match?
Yes, folded into the monthly contribution. A 50% match on the first 6% of an $80,000 salary is $200 a month, worth about $360,000 over 35 years at these assumptions.
What is the 4% rule and does this page apply it?
It is a planning guideline that a 4% first-year withdrawal, adjusted for inflation thereafter, has historically lasted about 30 years. This calculator does not model withdrawals at all; the 4% figures in the worked example are illustrative arithmetic on the ending balance.
Why does the inflation-adjusted number fall so fast?
Compounding cuts both ways. At 2.5%, prices multiply by 2.373 over 35 years, so the nominal balance is divided by that. It is the same exponential curve as the growth, pointed the other direction.
Sources and further reading
Figures and definitions on this page are drawn from the following primary sources. If you find something out of date, tell us and we will correct it.