Planning for retirement is the process of determining income goals and the actions necessary to achieve those goals. It includes identifying sources of income, estimating expenses, implementing a savings program, and managing assets. This calculation of retirement focuses on the compounding growth of your monthly contributions and your initial capital over the duration of your working life.
Understanding the Core Variables
Compounding Period: The time between your current age and your target retirement age. The longer this duration, the more time your investments have to grow exponentially.
Portfolio Growth: This is the average annual return you expect from your investments (stocks, bonds, real estate). Historical market averages often sit between 6% and 8% before inflation.
Inflation Impact: Inflation reduces the purchasing power of your money. A million dollars today will not buy the same amount of goods 30 years from now. This calculator adjusts your final total to show "Today's Dollars" for a more realistic perspective.
Example Retirement Scenario
Imagine a 35-year-old individual who plans to retire at age 65. They currently have $20,000 saved and plan to contribute $800 every month. Assuming a 7% annual return and 3% inflation:
Nominal Total at 65: Approximately $1,118,000.
Inflation-Adjusted Value: Roughly $460,000 in today's purchasing power.
Sustainable Monthly Drawdown: About $3,700 per month (before taxes).
The 4% Safe Withdrawal Rule
The result "Est. Monthly Income" uses the industry-standard 4% rule. This guideline suggests that you can safely withdraw 4% of your total retirement nest egg in the first year of retirement, and then adjust that amount for inflation every year thereafter, with a high probability that your funds will last at least 30 years.
function calculateRetirement() {
var currentAge = parseFloat(document.getElementById('currentAge').value);
var retireAge = parseFloat(document.getElementById('retireAge').value);
var currentSavings = parseFloat(document.getElementById('currentSavings').value);
var monthlyContrib = parseFloat(document.getElementById('monthlyContrib').value);
var annualReturn = parseFloat(document.getElementById('annualReturn').value);
var inflation = parseFloat(document.getElementById('inflation').value);
if (isNaN(currentAge) || isNaN(retireAge) || isNaN(currentSavings) || isNaN(monthlyContrib) || isNaN(annualReturn) || isNaN(inflation)) {
alert("Please fill in all fields with valid numbers.");
return;
}
if (retireAge 0) {
fvContributions = monthlyContrib * (Math.pow(1 + monthlyRate, monthsToRetire) – 1) / monthlyRate;
} else {
fvContributions = monthlyContrib * monthsToRetire;
}
var totalNestEgg = fvCurrent + fvContributions;
// Inflation Adjustment (Purchasing Power)
var inflationFactor = Math.pow(1 + (inflation / 100), yearsToRetire);
var adjustedValue = totalNestEgg / inflationFactor;
// 4% Rule Monthly Income
var annualIncome = totalNestEgg * 0.04;
var monthlyIncome = annualIncome / 12;
// Display Results
document.getElementById('results').style.display = 'block';
document.getElementById('totalNestEgg').innerText = '$' + totalNestEgg.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('inflationAdjusted').innerText = '$' + adjustedValue.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('monthlyIncome').innerText = '$' + monthlyIncome.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
}