Estimate your retirement readiness based on current savings and planned contributions.
Understanding Your Retirement Readiness
The Dave Ramsey approach emphasizes a debt-free lifestyle and building wealth through consistent saving and investing. While Dave Ramsey advocates for paying off debt aggressively, including mortgages, before focusing heavily on retirement, this calculator helps you understand your potential retirement nest egg based on common retirement planning principles. It projects the future value of your current savings and your ongoing contributions, assuming a consistent rate of return.
This calculator uses the concept of Future Value of an Annuity combined with the Future Value of a Lump Sum.
Current Savings Growth: Your current retirement savings are projected to grow over the years until your target retirement age, compounded annually at your assumed rate of return. The formula for this is:
FV_lump_sum = PV * (1 + r)^n
Where:
FV_lump_sum = Future Value of your current savings
PV = Present Value (your Current Retirement Savings)
r = Annual rate of return (Assumed Annual Rate of Return / 100)
n = Number of years until retirement (Target Retirement Age – Your Current Age)
Future Contributions Growth: Each annual contribution is also assumed to grow over time until retirement. This is calculated using the future value of an ordinary annuity formula:
FV_annuity = P * [((1 + r)^n - 1) / r]
Where:
FV_annuity = Future Value of your annual contributions
P = Periodic Payment (your Annual Contribution)
r = Annual rate of return (Assumed Annual Rate of Return / 100)
n = Number of years until retirement (Target Retirement Age – Your Current Age)
Total Retirement Projection: The total projected retirement savings is the sum of the future value of your lump sum and the future value of your annuity.
Total FV = FV_lump_sum + FV_annuity
Important Considerations:
This is a projection and not a guarantee. Investment returns can vary significantly year to year.
Inflation is not factored into this calculation. The purchasing power of your savings in the future will likely be less than today.
Taxes on investment gains and retirement withdrawals are not included.
Dave Ramsey's philosophy often prioritizes becoming debt-free (including the mortgage) before maximizing retirement contributions. This calculator assumes you are balancing these goals or have reached a point where retirement savings are a primary focus.
Use this calculator as a tool to visualize the power of consistent saving and compounding over time. Adjust the inputs to see how changes in your savings rate, retirement age, or rate of return can impact your long-term financial outlook.
function calculateRetirementReadiness() {
var currentSavings = parseFloat(document.getElementById("currentSavings").value);
var annualContribution = parseFloat(document.getElementById("annualContribution").value);
var retirementAge = parseInt(document.getElementById("retirementAge").value);
var currentAge = parseInt(document.getElementById("currentAge").value);
var assumedRateOfReturn = parseFloat(document.getElementById("assumedRateOfReturn").value);
var resultDiv = document.getElementById("result");
resultDiv.style.display = "block";
resultDiv.innerHTML = ""; // Clear previous results
// Input validation
if (isNaN(currentSavings) || currentSavings < 0 ||
isNaN(annualContribution) || annualContribution < 0 ||
isNaN(retirementAge) || retirementAge <= 0 ||
isNaN(currentAge) || currentAge < 0 ||
isNaN(assumedRateOfReturn) || assumedRateOfReturn = retirementAge) {
resultDiv.innerHTML = "Your current age must be less than your target retirement age.";
resultDiv.style.backgroundColor = "#dc3545"; // Red for error
return;
}
var yearsToRetirement = retirementAge – currentAge;
var ratePerPeriod = (assumedRateOfReturn / 100);
// Calculate Future Value of Lump Sum (Current Savings)
var futureValueOfCurrentSavings = currentSavings * Math.pow((1 + ratePerPeriod), yearsToRetirement);
// Calculate Future Value of Annuity (Annual Contributions)
var futureValueOfContributions = 0;
if (ratePerPeriod > 0) {
futureValueOfContributions = annualContribution * (Math.pow((1 + ratePerPeriod), yearsToRetirement) – 1) / ratePerPeriod;
} else {
// If rate is 0, contributions just add up
futureValueOfContributions = annualContribution * yearsToRetirement;
}
var totalProjectedSavings = futureValueOfCurrentSavings + futureValueOfContributions;
// Format numbers for display
var formattedTotal = totalProjectedSavings.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedCurrentGrowth = futureValueOfCurrentSavings.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedContributionsGrowth = futureValueOfContributions.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
resultDiv.innerHTML = formattedTotal +
"Projected Retirement Savings" +
"(Includes growth of current savings: " + formattedCurrentGrowth + " and contributions: " + formattedContributionsGrowth + " over " + yearsToRetirement + " years)";
resultDiv.style.backgroundColor = "var(–success-green)"; // Reset to green
}