The purpose
Retirement planning begins with a single question: How much will I have? This calculator bridges that gap by projecting your retirement corpus—the total nest egg you'll accumulate from today until you stop working. By entering your current savings, monthly contributions, and expected investment returns, you get a concrete target to work toward and can adjust your strategy if needed.
How it works
The calculator uses the future value of an annuity formula combined with compound growth. It takes three streams of money:
- Your current savings – grown at your expected annual return rate for the number of years until retirement
- Your monthly contributions – each payment invested and compounded for however long it remains in the account
- The combined effect – all money working together to build your final corpus
Every month, your balance grows by a fraction of the annual return rate, and your new contribution is added to that growing balance.
The formula
FV = PV × (1 + r)^n + PMT × [((1 + r)^n − 1) / r]
Where:
- FV = Future Value (your retirement corpus)
- PV = Present Value (current savings)
- r = Monthly return rate (annual rate ÷ 12)
- n = Total number of months until retirement
- PMT = Monthly contribution
Worked example
Let's say you're 35 years old and plan to retire at 65. You have $50,000 saved, contribute $500 monthly, and expect a 9% annual return.
Inputs:
- Current age: 35
- Retirement age: 65
- Current savings: $50,000
- Monthly contribution: $500
- Expected return: 9% p.a.
Calculation:
- Years until retirement: 65 − 35 = 30 years
- Months until retirement: 30 × 12 = 360 months
- Monthly return rate: 9% ÷ 12 = 0.75% = 0.0075
Step 1: Growth of current savings
- $50,000 × (1.0075)^360 = $50,000 × 9.1055 = $455,275
Step 2: Growth of monthly contributions
- $500 × [((1.0075)^360 − 1) / 0.0075]
- $500 × [(9.1055 − 1) / 0.0075]
- $500 × 1,080.73 = $540,365
Step 3: Total retirement corpus
- $455,275 + $540,365 = $995,640
In this scenario, your disciplined saving and compound growth build a corpus of roughly $1 million over 30 years.
Things to watch
Return volatility: Markets don't deliver steady 9% every year. In some years you'll gain 15%; in others, you might lose 5%. This calculator averages them out. If you're risk-averse, use a lower rate (6–7%) to be conservative.
Inflation matters: That $1 million will have less purchasing power in 30 years than today. If inflation averages 3% p.a., your corpus's real value drops by roughly 60%. Factor this in when deciding whether your target is realistic.
Life changes: Job changes, salary cuts, unexpected expenses, or health issues may force you to pause or reduce contributions. Build a small buffer into your plan.
Withdrawals before retirement: Any money you withdraw before retirement stops compounding. Treat your retirement savings as untouchable.
This calculator provides an estimate for planning purposes and is not professional financial advice. Market returns vary, and actual results will differ. Consult a qualified financial advisor to tailor a retirement strategy to your circumstances.