Retirement Calculator

How it works

P is current savings, C the annual contribution, r the annual return rate, and n the number of years until retirement. The formula compounds your current savings and contributions with interest.

Worked examples

• Saving 5,000 a year from age 30 to 65 at 7%

  Peter starts at 30 with 10,000 already saved and adds to it every year until 65.

  Starting at 30 with 10,000 already saved and adding 5,000 a year at 7% until 65 grows to roughly 800,000. Over that horizon the contributions matter more than the starting balance.

• A lump sum left to grow for 20 years at 8%

  Salma leaves a lump sum untouched for twenty years instead of contributing monthly.

  2,000,000 left untouched at 8% a year for 20 years becomes about 9,322,000 - the effect of one long period of compounding rather than many contributions.

• Starting ten years later on the same contributions

  Peter, weighing whether to start saving at 45 rather than at 30.

  Beginning at 45 instead of 30 with the same 10,000 already saved and the same 5,000 a year at 7% ends at roughly 244,000 rather than about 800,000. The fifteen years that are missing are the ones in which the earliest contributions would have compounded the longest.

What this assumes, and where it does not apply

What it assumes

• Contributions are added at the end of each year and the return is applied to the whole balance.
• The return rate you enter is held constant; no fees, tax or inflation are applied.
• The balance is projected as a single figure at the target age and nothing is withdrawn before then, so a pension already in payment is not modelled.

Where the result does not apply

• Real investment returns vary year to year, and a bad decade early on changes the outcome materially.
• This is a projection of an arithmetic assumption, not a forecast of any particular fund or pension scheme.
• Inflation is not deducted: a nominal balance 35 years out buys less than the same figure today (see the inflation calculator).
• It does not apply to a defined-benefit pension, where the income depends on a formula based on final salary and years of service rather than on the size of a pot.

Frequently asked questions

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