How to Calculate Retirement Savings
8 min read · Updated September 26, 2026 · by Thomas M, Registered Investment Adviser (South Carolina)
Retirement planning boils down to three calculations: how large your pot will be, what it will be worth after inflation, and how much income it can safely provide. This guide walks through each with a worked example.
Step 1: Project the pot
Savings grow through compounding. With monthly return i and n months: FV = current × (1 + i)n + monthly × [((1 + i)n − 1) ÷ i]. A 35-year-old with $50,000, saving $1,000 a month at 6% until 65 reaches $1,305,643.80.
Step 2: Adjust for inflation
Divide by (1 + inflation)years. At 2.5% over 30 years, the pot is worth $622,456.13 in today’s money — the number that compares with your current costs.
Step 3: Convert the pot to income
Multiply by a withdrawal rate. At 4%, that is $24,898.25 a year in today’s money. The 4% rule comes from historical studies of 30-year US retirements; longer retirements often use 3–3.5%.
Step 4: Work backwards to a target
To support $60,000 a year in today’s money starting from zero, the saving needed is $3,132.21 a month under the same assumptions. Starting ten years later raises the projected pot gap sharply: age 45 gives only $627,551.12.
What the model leaves out
Taxes, fees, Social Security or pensions, employer matches and uneven market returns. Use the retirement calculator as a baseline, then refine with a qualified adviser.
Practice questions
Test yourself, then tap to check. Answers are calculated by the tools linked below.
- A 40-year-old has $80,000, saves $800 a month, expects 6% growth and 2.5% inflation and retires at 65. What will the pot be worth in today’s money?
Show answer
Projected savings at retirement: $911,592.75 · In today’s money (inflation-adjusted): $491,704.55
- Spending $50,000 a year, with $150,000 saved, saving $40,000 a year at 7% and 2% inflation. What is the FIRE number and how long to reach it?
Show answer
Your FIRE number: $1,250,000.00 · Time to reach it: 15 years, 9 months
- $5,000 at 5% compounded yearly for 15 years, no contributions.
Show answer
Future value: $10,394.64
Frequently asked questions
How much should I save for retirement?
A common rule of thumb is 15% of income, or about 25 times your yearly spending in total. The right figure depends on your age, goals and other income.
What is the 4% rule?
Withdraw 4% of your portfolio in the first year, then adjust for inflation. It has historically lasted about 30 years but is not guaranteed.
What return should I assume?
Many planners use 5–7% before inflation for a balanced portfolio, and test lower values.
Why look at today’s money?
Because inflation makes large future numbers look bigger than they are in buying power.
Try it yourself
Retirement CalculatorProject your retirement savings, see the income they could provide in today’s money and what you need to save to hit your goal.FIRE CalculatorFind your FIRE number and how many years until financial independence at your savings rate, plus your Coast FIRE number.Compound Interest CalculatorSee how savings grow with compounding and regular contributions.Keep learning
How Compound Interest Works7 min readHow to Calculate Your FIRE Number7 min readHow to Calculate Inflation5 min readReviewed by Thomas M, Registered Investment Adviser (South Carolina), who launched his own financial advisory firm in 2010. Spot a mistake? Tell us. See our editorial policy. Finance content is educational and not financial advice; see the disclaimer.