Project your retirement pot from current savings, monthly contributions and returns — plus 4%-rule monthly income.
Enter your current savings, monthly contribution, years until retirement and expected annual return. The calculator compounds monthly and estimates sustainable monthly income with the 4% rule.
Formula: FV = P(1+r)^n + PMT × (((1+r)^n − 1) ÷ r), r = annual ÷ 12. Monthly income = pot × 4% ÷ 12. Example: $50,000 + $500/month for 30 years at 7% → $1,015,810 pot, ≈$3,386/month.
Projecting your retirement pot is one of the highest-value calculations in personal finance, and the calculator above does it in seconds. Follow these steps to build an accurate projection.
Pro tip: run the calculator three times: with a conservative return (5 percent), a moderate return (7 percent), and your planned contribution increased by 2 percent of salary. The range of outcomes shows you both the risk and the cheapest way to close any gap.
A pension, in modern usage, is simply the pool of money you build during your working years to fund your retirement. Most workers today build it through defined contribution plans such as 401(k)s and IRAs, where you and often your employer contribute money that is invested in the market. This replaced the older defined benefit model, where employers promised a specific monthly check for life. The shift moved investment risk from the employer to you, which is exactly why understanding the projection math matters.
The engine of every pension is compounding: returns earning returns on themselves, year after year. In the calculator’s default example, $230,000 of contributions becomes $1,015,810, meaning $785,810, more than three-quarters of the final pot, is pure growth. Compounding is back-loaded: in the first decade the contributions dominate, but in the final decade the growth on the accumulated balance dwarfs new contributions. This is why a dollar invested at age 25 is worth roughly five times a dollar invested at age 45, assuming 7 percent returns.
The bridge from pot to paycheck is the 4% rule, a guideline suggesting you can withdraw 4 percent of your pot in the first year of retirement and adjust for inflation each year after, with the money lasting about 30 years. On a $1,000,000 pot that means $40,000 in year one, or $3,333 per month. It is a rule of thumb, not a guarantee: it assumes a balanced portfolio and average markets, and many planners now suggest 3.3 to 3.5 percent for longer retirements or cautious temperaments.
Planners also use the replacement ratio: the share of your pre-retirement income your pension must replace. A common target is 70 to 80 percent, since retirees typically spend less on commuting, mortgages, and retirement saving itself. If you earn $60,000, a 70 percent replacement ratio means $42,000 per year, or $3,500 per month, of retirement income from all sources including Social Security.
Finally, remember the projection is nominal: it ignores inflation. At 2.5 percent inflation, prices roughly double every 29 years, so a $1,000,000 pot in 30 years buys what about $480,000 buys today. Always read the pot in today’s dollars by mentally discounting, or better, enter a real (inflation-adjusted) return of 4 to 5 percent instead of a nominal 7 percent.
The calculator projects your pot with the future-value formula for a lump sum plus regular contributions:
FV = P(1+r)^n + PMT x (((1+r)^n – 1) / r)
where P is the current savings, PMT is the monthly contribution, r is the monthly return (annual return / 12), and n is the number of months (years x 12). The monthly payout uses the 4% rule: Monthly income = Pot x 4% / 12. The two worked examples below apply the formula with real numbers.
Worked example 1: starting from zero. You have no savings yet but contribute $400 per month for 30 years at 7 percent annual return. Monthly rate r = 0.07 / 12 = 0.0058333, months n = 360. The growth factor (1.0058333)^360 = 8.116497. The annuity factor is (8.116497 – 1) / 0.0058333 = 1,219.971. Future value = $400 x 1,219.971 = $487,988.40. Your contributions total $400 x 360 = $144,000, so growth is $487,988.40 – $144,000 = $343,988.40, more than double what you put in. The 4%-rule monthly income is $487,988.40 x 0.04 / 12 = $1,626.63.
Worked example 2: lump sum only. You invest a $100,000 inheritance with no further contributions at 6 percent annual return for 20 years. Monthly rate r = 0.005, months n = 240. Growth factor (1.005)^240 = 3.3102. Future value = $100,000 x 3.3102 = $331,020. Growth = $331,020 – $100,000 = $231,020. Monthly 4%-rule income = $331,020 x 0.04 / 12 = $1,103.40. Notice how the lump sum more than triples with zero additional effort: time plus return did all the work.
Both examples show the same lesson: the formula rewards early money and long horizons far more than it rewards the monthly amount. Ten extra years of compounding routinely beats doubling your contribution.
Maria is 35, earns $60,000 per year, and plans to retire at 65. She has $20,000 in her 401(k) and contributes 12 percent of her salary, which is $7,200 per year or $600 per month, including her employer match. She assumes a 7 percent annual return over the 30 years.
Running the formula: monthly rate r = 0.0058333, n = 360, growth factor 8.116497, annuity factor 1,219.971. The $20,000 lump sum grows to $20,000 x 8.116497 = $162,329.94. The monthly contributions grow to $600 x 1,219.971 = $731,982.60. Total projected pot = $894,312.54. Her total contributions are $20,000 + ($600 x 360) = $236,000, so growth contributes $658,312.54, nearly triple her contributions.
The 4%-rule monthly income is $894,312.54 x 0.04 / 12 = $2,981.04. Maria’s target is a 70 percent replacement ratio: 0.70 x $60,000 / 12 = $3,500 per month from all sources. She faces a shortfall of about $519 per month before Social Security.
How does she close it? Raising her contribution to $750 per month (15 percent of salary): $750 x 1,219.971 = $914,978.25, plus $162,329.94 = $1,077,308.19, giving monthly income of $3,591.03, which clears her $3,500 target. An extra $150 per month, $1,800 per year, buys her roughly $610 per month of retirement income for life. That trade, made visible by the calculator, is the single most motivating calculation in personal finance.
David is 50 and receives a $150,000 inheritance. He invests the entire lump sum at 6 percent annual return for 15 years until retirement at 65, making no additional contributions.
Monthly rate r = 0.005, n = 180, growth factor (1.005)^180 = 2.45409. Future value = $150,000 x 2.45409 = $368,113.50. Growth = $368,113.50 – $150,000 = $218,113.50. The 4%-rule monthly income is $368,113.50 x 0.04 / 12 = $1,227.05.
Now suppose David also adds $300 per month from his salary. The annuity factor is (2.45409 – 1) / 0.005 = 290.818, so the contributions grow to $300 x 290.818 = $87,245.40. Total pot = $368,113.50 + $87,245.40 = $455,358.90, and monthly income rises to $1,517.86. The $54,000 of extra contributions ($300 x 180) generated $33,245 of additional growth and $291 more per month for life.
The lesson: windfalls work hardest when invested immediately as a lump sum, and combining a lump sum with steady contributions captures both advantages. Every month David delays investing the inheritance costs him roughly 0.5 percent of growth, about $1,840 on $368,000, so acting promptly matters.
1. Starting too late. Delaying from age 25 to age 35 cuts the compounding window from 40 years to 30. At 7 percent, $500 per month for 40 years grows to about $1,197,800, but for 30 years it reaches only $609,985: the lost decade costs nearly $588,000, far more than the $60,000 of skipped contributions. Start with whatever you can afford; the starting date matters more than the starting amount.
2. Overestimating investment returns. Planning at 10 or 12 percent because stocks averaged that historically ignores inflation (2 to 3 percent), fees (0.5 to 1 percent), and the bonds in a realistic portfolio. A 10 percent nominal assumption can overstate your pot by 40 percent or more versus a 7 percent assumption over 30 years. Plan at 6 to 7 percent nominal, or 4 to 5 percent in today’s dollars, and treat anything better as a bonus.
3. Ignoring fees. A 1 percent annual fee sounds trivial, but over 30 years it compounds against you: $500 per month at 7 percent grows to $609,985, while at 6 percent (7 minus the 1 percent fee) it reaches only $505,365, a loss of over $104,000. Prefer low-cost index funds, and check your plan’s expense ratios at least once a year.
4. Forgetting inflation. A $1,000,000 pot in 30 years at 2.5 percent inflation has the buying power of about $477,000 today. If you plan your retirement lifestyle around the nominal number, you will be shocked at the checkout. Either enter a real return (nominal minus inflation) in the calculator or mentally halve long-horizon projections.
5. Raiding the pot or freezing contributions. Cashing out a 401(k) when changing jobs triggers taxes plus a 10 percent penalty, but the true cost is the lost compounding: $20,000 withdrawn at age 35 would have become $152,000 by 65 at 7 percent. And pausing contributions during market drops means missing the recovery that historically follows. Automate contributions, never borrow from the plan except in genuine emergencies, and roll old accounts into your current plan or an IRA instead of cashing out.
Continue planning with the Retirement Calculator for a fuller retirement picture, the Savings Calculator for general savings goals, or browse the full Financial Calculators collection.
This page’s Pension Calculator projects a retirement pot from four inputs: current savings in dollars, monthly contribution in dollars, years to retirement, and expected annual return as a percentage. Formulas: future value FV = P(1+r)^n + PMT x (((1+r)^n – 1) / r), where r = annual return / 12 and n = years x 12; estimated monthly payout = pot x 4% / 12 (the 4% rule). Reference values: $50,000 current savings, $500 monthly contribution, 30 years, 7 percent annual return gives a projected pot of $1,015,810.37, total contributions of $230,000.00, growth of $785,810.37, and estimated monthly payout of $3,386.03. Worked values: $0 starting plus $400 per month for 30 years at 7 percent gives $487,988.40; $100,000 lump sum for 20 years at 6 percent gives $331,020; $20,000 plus $600 per month for 30 years at 7 percent gives $894,312.54. Outputs: projected pension pot, total contributions, investment growth, and estimated monthly payout. Returns compound monthly; projections are nominal and do not account for inflation, taxes, or fees.
It depends on contributions, time and return. Example: $50,000 saved plus $500/month for 30 years at 7% grows to about $1,015,810.
A guideline that withdrawing 4% of your pot per year (≈ pot ÷ 300 per month) should sustain roughly 30 years of retirement income.
Common guidance is 10–15% of income — and starting early matters more than the amount, thanks to compounding.
6–8% nominal for a stock-heavy portfolio is typical historically; use a conservative 5–6% for planning.
The projection is nominal — mentally subtract ~2–3% yearly inflation, and remember fund fees reduce your effective return.
A common guideline is to have 1x your annual salary saved by 30, 3x by 40, 6x by 50, and 8x by 60. On a $70,000 salary, that means about $210,000 by age 40. These are rough benchmarks, not rules: what matters most is your savings rate and time in the market. Use the calculator above to project your own path rather than chasing someone else’s number.
Mostly, with caveats. The 4% rule comes from research showing a balanced portfolio survived 30-year retirements in historical US data. But today’s lower bond yields and longer retirements make some planners prefer 3.3 to 3.5 percent, and flexible strategies that trim spending after down years stretch money further. Treat 4% as a starting estimate, not a guarantee, and revisit your withdrawal rate every few years.
Investing the lump sum immediately wins about two-thirds of the time, because markets rise more often than they fall. But dollar-cost averaging over 6 to 12 months reduces the regret if markets drop right after you invest. If the money is for retirement decades away, invest it now. If a large drop would cause you to panic-sell, averaging in is the better behavioral choice.
Sources: standard retirement-planning references, including the Employee Benefit Research Institute and widely used personal finance texts.
Also try our Retirement Calculator and Savings Calculator — or browse all Financial Calculators.