How the projection works
Each month, the balance earns one-twelfth of the annual return and your contribution is added. Once a year the contribution grows by the increase you set — a simple way to reflect raises or a habit of bumping your 401(k) percentage. When you reach retirement age, the calculator reports the balance three ways: in future dollars, in today's dollars (after inflation), and as the first-year income a chosen withdrawal rate would give.
The formulas
Each month: balance = balance × (1 + R/12) + contribution Each year: contribution = contribution × (1 + raise) Today's $: real = balance / (1 + inflation)^years Income: first-year withdrawal = balance × withdrawal rate
With no contribution increase, the monthly loop is identical to the textbook future-value-of-an-annuity formula FV = C × ((1 + i)^n − 1) / i plus the starting balance grown at (1 + i)^n.
Worked example
A 35-year-old has $40,000 saved and contributes $600 a month, raising it 2% a year, earning 6% until 67 (32 years).
The projected balance is about $1,142,000, built from $358,000 of contributions (including the starting $40,000) and roughly $784,000 of growth. With 2.5% inflation that is worth about $518,000 in today's dollars. A 4% first-year withdrawal is about $45,700 — roughly $20,700 a year in today's money, before Social Security.
Assumptions and limitations
- A steady average return. Real markets are volatile, and a bad sequence of returns just before or after retiring can change the outcome a lot.
- No taxes or fees. Traditional 401(k)/IRA withdrawals are taxed as income; Roth withdrawals generally aren't. A 1% annual fee can reduce a 30-year balance by roughly a quarter.
- Contribution limits aren't enforced. For the current IRS limits, see the IRS page on 401(k) contribution limits.
- The withdrawal rate is a planning shortcut, not a spending guarantee.
Background: Bengen, W. P. (1994), “Determining Withdrawal Rates Using Historical Data,” Journal of Financial Planning; Investor.gov, Retirement Toolkit, Managing lifetime income.
Frequently asked questions
What return should I assume?
There is no guaranteed number. A diversified stock-and-bond portfolio has historically returned somewhere around 5–7% a year before inflation over long periods, with large swings in between. Many planners test a conservative case (4–5%) alongside a moderate one (6–7%). Run both here and plan around the lower result.
What is the 4% rule?
It comes from studies of historical U.S. market returns (notably William Bengen, 1994, and the "Trinity study", 1998) which found that withdrawing 4% of the starting balance in year one, then adjusting for inflation, would have lasted at least 30 years in most past periods. It is a rule of thumb, not a guarantee; a lower rate is safer for longer retirements.
Why show "today's dollars"?
A million dollars in 30 years will buy much less than it does today. Dividing the future balance by cumulative inflation shows its purchasing power in today's terms, which is easier to compare with your current spending.
Should I include my employer match?
Yes — add the match to your monthly contribution. If you put in $500 a month and your employer matches 50%, enter $750.
Does this include Social Security?
No. It projects only your own savings. Your estimated Social Security benefit is available in your my Social Security account at ssa.gov and adds to the income shown here.
CalcNest results are estimates based on the inputs and assumptions above, not financial, tax or lending advice. A lender's official Loan Estimate or your account statement is the final word.