This calculator helps you estimate your potential retirement nest egg based on your current savings,
planned contributions, expected investment growth, and the impact of inflation. It's a crucial tool
for financial planning, allowing you to visualize if your savings trajectory aligns with your retirement
goals.
How the Calculation Works
The core of the calculation involves projecting the future value of your savings year by year,
considering your annual contributions and the compounding effect of your expected annual return.
We then adjust this future value for inflation to provide a more realistic picture of your purchasing
power at retirement.
The formula for the future value of a series of payments (your contributions) compounded annually,
plus the growth of your existing savings, is complex. A simplified, iterative approach is used here:
Each year, your current savings grow by the Expected Annual Return. Then, your Annual Contribution is added.
This process repeats until your desired retirement age.
r is the rate of return per period (Expected Annual Return / 100).
n is the number of periods (Years until retirement).
PMT is the payment per period (Annual Contribution).
To account for inflation, the final projected amount is then "deflated" back to today's purchasing power
using the inflation rate.
Real Value = Future Value / (1 + i)^n
Where:
i is the annual inflation rate (Inflation Rate / 100).
n is the number of periods (Years until retirement).
Use Cases and Considerations
Goal Setting: Determine if your current savings plan is sufficient for your desired retirement lifestyle.
Contribution Adjustments: See how increasing your annual contributions can impact your final nest egg.
Investment Strategy: Understand the importance of a reasonable expected annual return, while acknowledging investment risk.
Impact of Time: Realize how much earlier you could retire or how much larger your nest egg could be by starting earlier or saving more.
Inflation Awareness: Recognize that the purchasing power of money decreases over time, making consistent saving and growth essential.
Disclaimer: This calculator provides an estimate for educational purposes only. It does not account for taxes, fees, changes in income, unexpected expenses, or market volatility. Consult with a qualified financial advisor for personalized retirement planning.
function calculateRetirementSavings() {
var currentAge = parseInt(document.getElementById("currentAge").value);
var retirementAge = parseInt(document.getElementById("retirementAge").value);
var currentSavings = parseFloat(document.getElementById("currentSavings").value);
var annualContribution = parseFloat(document.getElementById("annualContribution").value);
var expectedAnnualReturn = parseFloat(document.getElementById("expectedAnnualReturn").value) / 100;
var inflationRate = parseFloat(document.getElementById("inflationRate").value) / 100;
var resultValueElement = document.getElementById("result-value");
var resultDescriptionElement = document.getElementById("result-description");
// Basic validation
if (isNaN(currentAge) || isNaN(retirementAge) || isNaN(currentSavings) || isNaN(annualContribution) || isNaN(expectedAnnualReturn) || isNaN(inflationRate)) {
resultValueElement.textContent = "Error";
resultDescriptionElement.textContent = "Please enter valid numbers for all fields.";
return;
}
if (currentAge >= retirementAge) {
resultValueElement.textContent = "N/A";
resultDescriptionElement.textContent = "Retirement age must be greater than current age.";
return;
}
if (currentSavings < 0 || annualContribution < 0) {
resultValueElement.textContent = "Error";
resultDescriptionElement.textContent = "Savings and contributions cannot be negative.";
return;
}
var yearsToRetirement = retirementAge – currentAge;
var projectedFutureValue = currentSavings;
// Calculate projected value with compounding and contributions
for (var i = 0; i < yearsToRetirement; i++) {
projectedFutureValue += projectedFutureValue * expectedAnnualReturn;
projectedFutureValue += annualContribution;
}
// Calculate real value adjusted for inflation
var projectedRealValue = projectedFutureValue / Math.pow(1 + inflationRate, yearsToRetirement);
// Format the output
var formattedProjectedRealValue = projectedRealValue.toLocaleString('en-US', { style: 'currency', currency: 'USD', minimumFractionDigits: 0, maximumFractionDigits: 0 });
resultValueElement.textContent = formattedProjectedRealValue;
var description = "This is the estimated value of your retirement savings in today's dollars, ";
description += "assuming an average annual return of " + (expectedAnnualReturn * 100).toFixed(1) + "% and ";
description += "an average inflation rate of " + (inflationRate * 100).toFixed(1) + "% per year.";
resultDescriptionElement.textContent = description;
}