Your Required Rate of Return
function calculateRateOfReturn() {
var currentSavings = parseFloat(document.getElementById("currentSavings").value);
var desiredRetirementSavings = parseFloat(document.getElementById("desiredRetirementSavings").value);
var yearsToRetirement = parseInt(document.getElementById("yearsToRetirement").value);
var annualContributions = parseFloat(document.getElementById("annualContributions").value);
var resultElement = document.getElementById("result");
var explanationElement = document.getElementById("explanation");
if (isNaN(currentSavings) || isNaN(desiredRetirementSavings) || isNaN(yearsToRetirement) || isNaN(annualContributions)) {
resultElement.innerHTML = "Please enter valid numbers for all fields.";
explanationElement.innerHTML = "";
return;
}
if (currentSavings < 0 || desiredRetirementSavings <= 0 || yearsToRetirement <= 0 || annualContributions < 0) {
resultElement.innerHTML = "Please enter positive values for savings, years, and non-negative contributions.";
explanationElement.innerHTML = "";
return;
}
// The calculation for the required rate of return is complex and often iterative.
// A common approach is to use a financial formula or a numerical method (like binary search)
// to find the rate (r) that satisfies the future value of an annuity formula:
// FV = PV * (1 + r)^n + C * [((1 + r)^n – 1) / r]
// Where:
// FV = Future Value (desiredRetirementSavings)
// PV = Present Value (currentSavings)
// r = annual rate of return (what we need to find)
// n = number of years (yearsToRetirement)
// C = annual contributions (annualContributions)
// Due to the complexity of solving for 'r' directly in this equation,
// we'll use an iterative approach (binary search) to approximate the rate.
var minRate = 0.001; // Start with a very small positive rate
var maxRate = 1.5; // Assume a maximum possible rate of 150% (highly unlikely, but for bounds)
var guessRate = 0;
var precision = 0.0001; // Desired precision for the rate
for (var i = 0; i 0) {
futureValueFromContributions = annualContributions * ((Math.pow(1 + guessRate, yearsToRetirement) – 1) / guessRate);
} else { // Handle case where guessRate is zero
futureValueFromContributions = annualContributions * yearsToRetirement;
}
var totalFutureValue = futureValueFromCurrent + futureValueFromContributions;
if (Math.abs(totalFutureValue – desiredRetirementSavings) < desiredRetirementSavings * precision) {
break; // Found a rate within acceptable precision
} else if (totalFutureValue < desiredRetirementSavings) {
minRate = guessRate;
} else {
maxRate = guessRate;
}
}
var requiredRate = guessRate * 100; // Convert to percentage
resultElement.innerHTML = requiredRate.toFixed(2) + "%";
explanationElement.innerHTML = "To reach your goal of " + desiredRetirementSavings.toLocaleString() +
" from your current savings of " + currentSavings.toLocaleString() +
" over " + yearsToRetirement + " years, with annual contributions of " +
annualContributions.toLocaleString() + ", you would need to achieve an average annual rate of return of approximately " +
requiredRate.toFixed(2) + "%. This calculation uses the future value of an annuity formula and an iterative approximation method.";
}
.calculator-container {
font-family: sans-serif;
max-width: 700px;
margin: 20px auto;
padding: 20px;
border: 1px solid #ccc;
border-radius: 8px;
background-color: #f9f9f9;
display: flex;
flex-wrap: wrap;
gap: 20px;
}
.calculator-input, .calculator-output {
flex: 1;
min-width: 250px;
}
.calculator-input label {
display: block;
margin-bottom: 8px;
font-weight: bold;
}
.calculator-input input[type="number"],
.calculator-input input[type="text"] {
width: calc(100% – 22px);
padding: 10px;
margin-bottom: 15px;
border: 1px solid #ccc;
border-radius: 4px;
}
.calculator-input button {
background-color: #4CAF50;
color: white;
padding: 12px 20px;
border: none;
border-radius: 4px;
cursor: pointer;
font-size: 16px;
}
.calculator-input button:hover {
background-color: #45a049;
}
.calculator-output h3 {
margin-top: 0;
color: #333;
}
#result {
font-size: 24px;
font-weight: bold;
color: #d9534f;
margin-bottom: 15px;
}
#explanation {
font-size: 14px;
color: #555;
line-height: 1.5;
}