Retirement Calculator
Project the retirement nest egg you are on track to build, then convert it into a sustainable monthly income — with both nominal figures and an inflation-adjusted view in today's money.
Nest egg at retirement (nominal)
£1,130,650.34
- Total contributed
- £230,000.00
- Investment gains
- £900,650.34
- Nest egg (today's money)
- £476,423.34
- Monthly retirement income (nominal)
- £5,967.99
- Monthly retirement income (today's money)
- £2,514.74
Accumulation compounds current savings and monthly contributions at the pre-retirement return: FV = PV·(1+r1)^n1 + PMT·((1+r1)^n1−1)/r1, where r1 = pre-retirement return / 12 and n1 = years-to-retirement × 12. Decumulation converts the nest egg into a sustainable monthly income via the ordinary-annuity payment formula PMT = FV · r2 / (1 − (1+r2)^−n2), where r2 = post-retirement return / 12 and n2 = retirement years × 12 — the level monthly withdrawal that exactly drains the balance over the chosen retirement length. Both nest egg and monthly income are also shown in today's money by dividing by (1 + inflation)^years-to-retirement.
How to use this calculator
Enter your current age and the age you plan to retire, your current retirement savings, the amount you contribute each month, the annual return you expect during accumulation and during retirement, an assumed inflation rate, and how many years you expect retirement to last. The calculator projects your nest egg at retirement and the level monthly income that nest egg can support — both in nominal pounds and in today's purchasing power.
How the calculation works
The accumulation phase uses the standard time-value-of-money formula for a starting balance plus level monthly contributions compounded at the pre-retirement return: FV = PV·(1+r1)^n1 + PMT·((1+r1)^n1−1)/r1, where r1 = pre-retirement return / 12 and n1 = years to retirement × 12. The decumulation phase converts the nest egg into a sustainable monthly income using the ordinary-annuity payment formula PMT = FV · r2 / (1 − (1+r2)^−n2), where r2 = post-retirement return / 12 and n2 = retirement years × 12 — the level monthly withdrawal that exactly drains the balance over the retirement length. Both figures are also reported in today's money by dividing by (1 + inflation)^years-to-retirement, the Fisher purchasing-power adjustment.
Worked example
Example: age 30 retiring at 65 (35 years to retirement), £20,000 current savings, £500/month, 7% pre-retirement return, 4% post-retirement return, 2.5% inflation, 25 years in retirement. Monthly rate r1 = 0.005833, n1 = 420. Lump-sum future value = 20,000 · 1.005833^420 ≈ £230,481. Contribution future value = 500 · (1.005833^420 − 1) / 0.005833 ≈ £902,067. Nest egg ≈ £1,132,548 nominal from £230,000 of contributions. Sustainable monthly income: r2 = 0.003333, n2 = 300; PMT ≈ 1,132,548 · 0.003333 / (1 − 1.003333^−300) ≈ £5,977/month nominal. Today's-money deflator = 1.025^35 ≈ 2.373, so nest egg in today's pounds ≈ £477,224 and monthly income in today's money ≈ £2,519.
Frequently asked questions
How much should I have saved for retirement?
A common rule of thumb is the "25× rule" — save about 25 times your desired annual retirement spending, which corresponds to a 4% safe withdrawal rate (the Trinity Study and Bengen's original research on sustainable US withdrawal rates over 30 years). So a household wanting £30,000/year in today's money from their portfolio would target roughly £750,000 in today's pounds at retirement. Multiplying-by-25 ignores state pensions, defined-benefit pensions, and other income sources — work out how much of your desired retirement spending those cover first, and aim the calculator at the gap.
What is a realistic return assumption for retirement planning?
Long-run historical averages: global equities around 7–9% nominal, a 60/40 balanced portfolio around 6–7% nominal, bonds around 3–5% nominal — before fees and tax. Many planners use 5–7% nominal for accumulation and a lower 3–4% for retirement, reflecting the more conservative asset mix most retirees hold. These are inputs not forecasts: running the calculator at a pessimistic, central, and optimistic return gives a much better feel for the range of outcomes than a single point estimate. Lower returns are especially important to model for the post-retirement phase, where sequence-of-returns risk is highest.
Why is the monthly income shown in "today's money"?
A nest egg of £1m in 30 years buys far less than £1m today. Dividing nominal figures by (1 + inflation)^years expresses them in current purchasing power — a much more useful figure for working out whether the projected retirement matches the lifestyle you want. The "today's money" monthly income is the equivalent of about that many current pounds per month, even though the actual cash amount will be higher in 30 years. For most planning the real (today's-money) view is the one to focus on; the nominal figure is what you will actually see on a statement at retirement.
Does this assume contributions stay flat?
Yes — this calculator models a constant monthly contribution for the entire accumulation phase. In practice most savers increase contributions over time, usually in line with pay rises. Two ways to handle that: (1) enter your average contribution across the horizon as a rough adjustment, or (2) run the calculator in stages — first stretch at the current contribution, take the ending balance as the new starting amount, then re-run with the higher contribution. The same caveat applies to employer pension contributions, which often step up with tenure or salary band.
Are state pension, Social Security, or workplace pensions included?
No — this calculator projects private retirement savings only. State pensions (UK State Pension, US Social Security) and defined-benefit workplace pensions are paid as income streams independent of the portfolio you build here. To get a full retirement picture, work out the after-tax income your state and DB pensions will provide, subtract that from your desired retirement spending, and use the gap as the income target the nest egg must support. The 4% safe-withdrawal sanity check then becomes: nest egg × 4% ≥ income gap.
How does the calculator treat tax?
It returns gross figures and assumes the return rate is net of fund fees inside a tax-sheltered wrapper (UK SIPP/ISA, US 401(k)/IRA, etc.). For a taxable account, subtract your effective tax drag from the pre-retirement return (typically 0.3–0.7 percentage points for a buy-and-hold equity portfolio). At decumulation, the monthly income shown is the gross withdrawal — your spendable amount will be lower if the withdrawal is taxable (e.g. UK SIPP drawdown above the 25% tax-free lump sum, US Traditional IRA distributions). Net withdrawals from Roth IRAs and the post-25% portion of UK pensions match the gross figure.
How does this differ from an investment or compound interest calculator?
The accumulation maths is identical to a compound-interest or investment calculator — the future value of a lump sum plus a level monthly contribution at a chosen return. What a retirement calculator adds is the decumulation step: it converts the nest egg into a sustainable monthly income using the ordinary-annuity payment formula, so you see the actual cash flow your savings can support rather than just the ending balance. Pair it with the Investment Calculator if you want to compare scenarios at different return rates, or with the Savings Goal Calculator if you want to solve for the monthly contribution needed to hit a target nest egg.