Projecting a Number Decades Away
Retirement planning asks you to estimate quantities nobody can know: how markets will perform, what inflation will do, how long you will live. The value of a projection is not that it predicts any of that but that it shows the shape of the problem, how much the contribution rate matters, and how much the starting date matters more.
This calculator projects a retirement balance from your current savings, monthly contribution, expected return and the years remaining.
How to Use the Projection
Run it more than once. A single scenario is far less informative than three at different return rates.
- Enter your current retirement savings and your current age.
- Enter your monthly contribution, including any employer match, since that is real money going in.
- Enter your target retirement age to set the number of years remaining.
- Enter an expected annual return. Something in the region of 5 to 7 per cent is a common long-run assumption for a diversified portfolio, and lower is the safer planning figure.
- Read the projected balance, then run the same inputs again at a return two points lower to see how sensitive the result is.
- Compare the projection against what you would need. A common rule of thumb is that 4 per cent of the balance is a sustainable annual withdrawal, which makes the target roughly 25 times your desired annual income.
Why Starting Early Beats Contributing More
Compounding rewards time more than it rewards amount. Someone contributing 200 a month from age 25 to 65 at 6 per cent ends with roughly 400,000. Someone contributing 400 a month from 45 to 65 puts in the same total and ends with around 185,000, less than half, from identical money, because the first personβs early contributions had forty years to grow rather than twenty.
That asymmetry is the single most useful thing a projection can show. It also means the most valuable action available to someone in their twenties is starting at all, even at a small amount, and the most valuable action available to someone in their fifties is usually raising the contribution sharply, since there is no longer time for growth to do the work.
The Cost of Waiting
Contributing 300 a month at 6 per cent annual return until age 65, by the age you start.
| Start age | Years contributing | Total contributed | Balance at 65 |
|---|---|---|---|
| 25 | 40 | 144,000 | ~597,000 |
| 30 | 35 | 126,000 | ~429,000 |
| 35 | 30 | 108,000 | ~303,000 |
| 40 | 25 | 90,000 | ~208,000 |
| 45 | 20 | 72,000 | ~139,000 |
| 50 | 15 | 54,000 | ~87,000 |
The five years between starting at 25 and starting at 30 cost around 168,000 at retirement, for 18,000 of contributions. No later five-year stretch is anywhere near as expensive to skip.
What a Projection Cannot Know
A single average return hides sequence risk: the order in which returns arrive matters enormously once you start withdrawing. A poor decade immediately after retiring damages a portfolio far more than the same decade twenty years earlier, even though the average is identical. Projections that assume a smooth rate cannot show this.
Nor do these figures account for inflation unless you enter a real rather than nominal return, and a balance that looks large in forty years will buy considerably less than the same number today. This is a general illustration rather than financial advice; tax treatment of pensions varies by country and by account type, and anyone making decisions on the basis of a projection should discuss it with a qualified adviser.