This calculator helps you project the potential future value of your retirement savings, considering your current assets, future contributions, investment growth, and the impact of inflation. It's a vital tool for understanding your retirement readiness, particularly for those participating in plans managed by the Public Employee Benefit Authority (PEBA) or similar retirement systems.
How the Calculation Works
The core of this calculation involves projecting the future value of your savings using compound interest and then adjusting for inflation.
Years to Retirement: This is the difference between your target retirement age and your current age.
Future Value of Current Savings: Your current savings are projected to grow based on the expected annual rate of return over the years until retirement. The formula used is:
FV = PV * (1 + r)^n
Where:
FV = Future Value
PV = Present Value (Current Savings)
r = Expected Annual Rate of Return (as a decimal)
n = Years to Retirement
Future Value of Annual Contributions: Each annual contribution is also compounded over the remaining years until retirement. This is calculated using the future value of an ordinary annuity formula:
FVA = P * [((1 + r)^n – 1) / r]
Where:
FVA = Future Value of Annuity
P = Periodic Payment (Annual Contribution)
r = Expected Annual Rate of Return (as a decimal)
n = Years to Retirement
Total Projected Nest Egg: The sum of the future value of current savings and the future value of annual contributions gives you the nominal total projected at retirement.
Real Value (Adjusted for Inflation): To understand the purchasing power of your nest egg in today's dollars, we adjust the nominal future value for inflation. The formula is:
Real Value = Nominal FV / (1 + i)^n
Where:
Nominal FV = Total Projected Nest Egg (in future dollars)
i = Expected Average Inflation Rate (as a decimal)
n = Years to Retirement
Key Inputs Explained:
Current Age: Your age now.
Target Retirement Age: The age at which you plan to stop working.
Current Retirement Savings: The total amount you currently have saved in your retirement accounts.
Annual Contribution: The amount you plan to contribute to your retirement accounts each year.
Expected Annual Rate of Return: The average yearly percentage gain you anticipate from your investments. This is an estimate and actual returns can vary significantly.
Expected Average Inflation Rate: The anticipated average yearly increase in the cost of goods and services. This helps gauge the future purchasing power of your savings.
Using the Calculator Effectively:
This calculator is a planning tool. It's best used to:
Estimate if your current savings and contribution rate are on track for your retirement goals.
Determine how changes in your contribution amount, expected rate of return, or retirement age might impact your final nest egg.
Understand the significant impact of compounding and inflation over long periods.
Disclaimer: This calculator provides an estimation based on the inputs provided. It does not account for taxes, fees, changes in contribution limits, or specific PEBA plan details (like pension calculations or specific investment options). Investment returns are not guaranteed. Consult with a qualified financial advisor for personalized retirement planning.
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 annualReturnRate = parseFloat(document.getElementById("annualReturnRate").value) / 100; // Convert percentage to decimal
var inflationRate = parseFloat(document.getElementById("inflationRate").value) / 100; // Convert percentage to decimal
var resultDiv = document.getElementById("result");
var resultValueDiv = document.getElementById("result-value");
var resultNotesP = document.getElementById("result-notes");
// Validate inputs
if (isNaN(currentAge) || isNaN(retirementAge) || isNaN(currentSavings) || isNaN(annualContribution) || isNaN(annualReturnRate) || isNaN(inflationRate) ||
currentAge < 18 || retirementAge < currentAge || currentSavings < 0 || annualContribution = current age).";
return;
}
var yearsToRetirement = retirementAge – currentAge;
// Calculate Future Value of Current Savings
var fvCurrentSavings = currentSavings * Math.pow(1 + annualReturnRate, yearsToRetirement);
// Calculate Future Value of Annual Contributions (Future Value of an Ordinary Annuity)
var fvAnnualContributions = 0;
if (annualReturnRate > 0) {
fvAnnualContributions = annualContribution * ((Math.pow(1 + annualReturnRate, yearsToRetirement) – 1) / annualReturnRate);
} else {
// If rate is 0, it's just the sum of contributions
fvAnnualContributions = annualContribution * yearsToRetirement;
}
// Total Projected Nest Egg (Nominal Value)
var totalNominalNestEgg = fvCurrentSavings + fvAnnualContributions;
// Calculate Real Value (Adjusted for Inflation)
var realNestEgg = totalNominalNestEgg / Math.pow(1 + inflationRate, yearsToRetirement);
// Format results
var formattedNominal = totalNominalNestEgg.toLocaleString('en-US', { style: 'currency', currency: 'USD' });
var formattedReal = realNestEgg.toLocaleString('en-US', { style: 'currency', currency: 'USD' });
resultValueDiv.innerText = formattedReal;
resultNotesP.innerText = `Projected nest egg in today's dollars. Nominal value at retirement: ${formattedNominal}. Assumes ${yearsToRetirement} years until retirement.`;
}