T. Rowe Price Retirement Calculator
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T. Rowe Price Retirement Savings Calculator
Projected Retirement Nest Egg
Enter your details to see your projection.
Understanding Your Retirement Savings Projection
Planning for retirement is a critical step towards securing your financial future. The T. Rowe Price Retirement Savings Calculator is designed to give you a clear projection of how your savings might grow over time, based on your current financial situation and future assumptions. This tool helps you visualize the potential outcome of your savings strategy and can inform decisions about your contributions and investment approach.
How the Calculation Works
The calculator uses a compound interest formula, taking into account your current savings, regular contributions, expected investment returns, and the impact of inflation. The core of the calculation involves projecting the future value of your investments year by year.
The formula for future value with compound interest is typically:
FV = PV * (1 + r)^n
Where:
- FV = Future Value
- PV = Present Value (your current savings)
- r = Annual rate of return (expressed as a decimal)
- n = Number of years
However, this calculator is more sophisticated as it incorporates annual contributions and inflation.
The calculation proceeds as follows:
- Years to Retirement: The number of years until you reach your desired retirement age is calculated:
Years = Retirement Age - Current Age.
- Annual Growth Projection: For each year until retirement, the calculator estimates the growth of your savings. It adds your annual contribution to the current balance and then applies the expected annual rate of return.
- Inflation Adjustment: To provide a more realistic picture, the projected future value is then adjusted for inflation. This means the purchasing power of your future nest egg is considered. The formula for inflation-adjusted value is:
Real Value = Nominal Value / (1 + Inflation Rate)^Number of Years.
The calculator iterates this process for each year, compounding both contributions and returns while accounting for inflation's erosive effect on purchasing power.
Key Inputs Explained:
- Current Age: Your age today.
- Desired Retirement Age: The age at which you plan to stop working and rely on your savings.
- Current Retirement Savings: The total amount you have already saved for retirement.
- Annual Contribution: The total amount you plan to save each year (e.g., from your salary, additional investments).
- Expected Annual Return: The average annual rate of return you anticipate from your investments. This is a crucial assumption and can significantly impact the outcome. It's often based on historical market performance, but past performance is not a guarantee of future results.
- Estimated Inflation Rate: The expected average annual rate at which prices for goods and services increase. This helps to understand the future purchasing power of your savings.
Why Use This Calculator?
This calculator serves as an educational tool to help you:
- Estimate your retirement readiness: See if your current savings plan is on track to meet your retirement goals.
- Understand the power of compounding: Witness how consistent saving and investing can grow your wealth over decades.
- Test different scenarios: Adjust your savings rate, expected returns, or retirement age to see how these changes affect your projected outcome.
- Motivate your savings behavior: Visualizing a potential future nest egg can be a powerful motivator to stick to your savings plan.
Disclaimer: This calculator provides an estimate based on the inputs provided and the assumptions made. It is not a guarantee of future results. Investment returns are not guaranteed and can fluctuate. It is advisable to consult with a qualified financial advisor for personalized retirement planning advice.
function calculateRetirement() {
var currentAge = parseFloat(document.getElementById("currentAge").value);
var retirementAge = parseFloat(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; // Convert to decimal
var inflationRate = parseFloat(document.getElementById("inflationRate").value) / 100; // Convert to decimal
var resultElement = document.getElementById("result");
// — Input Validation —
if (isNaN(currentAge) || currentAge 90) {
resultElement.innerHTML = "Please enter a valid current age (18-90).";
return;
}
if (isNaN(retirementAge) || retirementAge 90) {
resultElement.innerHTML = "Please enter a valid retirement age (50-90).";
return;
}
if (currentAge >= retirementAge) {
resultElement.innerHTML = "Your current age cannot be greater than or equal to your retirement age.";
return;
}
if (isNaN(currentSavings) || currentSavings < 0) {
resultElement.innerHTML = "Please enter a valid current savings amount (0 or more).";
return;
}
if (isNaN(annualContribution) || annualContribution < 0) {
resultElement.innerHTML = "Please enter a valid annual contribution amount (0 or more).";
return;
}
if (isNaN(expectedAnnualReturn) || expectedAnnualReturn < 0) {
resultElement.innerHTML = "Please enter a valid expected annual return (0% or more).";
return;
}
if (isNaN(inflationRate) || inflationRate < 0) {
resultElement.innerHTML = "Please enter a valid estimated inflation rate (0% or more).";
return;
}
// — Calculation Logic —
var yearsToRetirement = retirementAge – currentAge;
var projectedNestEggNominal = currentSavings;
var yearsInvested = 0;
for (var i = 0; i < yearsToRetirement; i++) {
projectedNestEggNominal = projectedNestEggNominal * (1 + expectedAnnualReturn) + annualContribution;
yearsInvested++;
}
// Calculate the future value adjusted for inflation to represent today's purchasing power
var projectedNestEggReal = projectedNestEggNominal / Math.pow((1 + inflationRate), yearsInvested);
// Format the output
var formattedNominal = projectedNestEggNominal.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
var formattedReal = projectedNestEggReal.toLocaleString(undefined, { style: 'currency', currency: 'USD' });
resultElement.innerHTML = "Projected Nest Egg at Retirement: " + formattedNominal + "
(In today's dollars: " + formattedReal + ")";
}