Retirement / 401(k) Savings

Projecting Retirement Savings Growth and Withdrawals

A retirement calculator projects how savings grow over time using compound interest, working forward from today’s contributions or backward from a target balance or withdrawal need. Retirement planning is really four different questions, so this calculator covers all four — pick the one that matches what you’re trying to figure out:

• How much will I have? Given what you’re saving now, project your account balance at retirement.
• How much should I save? Given a target balance, solve for the monthly contribution that gets you there.
• How much can I withdraw? Given your nest egg and how long it needs to last, find a level monthly withdrawal that spends it down to exactly zero over that time — not a guess, but the precise amount.
• How long will my money last? Given your nest egg and a spending amount you choose, find out how many years it lasts.

The first two are accumulation questions (a balance growing with contributions); the last two are drawdown questions (a balance shrinking as you spend it, while what’s left keeps earning a return). Switching between them keeps your last-entered numbers for each, so you can go back and forth without re-typing anything.

The Formulas

How much will I have? and how much should I save? both use the standard future value of an annuity formula (the same math behind the Compound Interest Calculator) — one solves for the ending balance, the other rearranges the same formula to solve for the required monthly contribution instead:

$$\vE{\text{Balance}} = \vA{P}(1 + \vB{r})^{\vC{n}} + \vD{PMT} \times \left[\frac{(1 + \vB{r})^{\vC{n}} - 1}{\vB{r}}\right]$$

where $\vA{P}$ is the starting balance, $\vD{PMT}$ is the monthly contribution (yours plus any employer match), $\vB{r}$ is the monthly rate of return, and $\vC{n}$ is the number of months.

How much can I withdraw? and how long will my money last? are mathematically identical to a loan being paid off — think of your retirement balance as the “loan,” and each withdrawal as a “payment” against it. The same amortization formula that computes a mortgage payment computes a sustainable withdrawal:

$$\text{Withdrawal} = \vE{\text{Balance}} \times \frac{\vB{r}(1 + \vB{r})^{\vC{n}}}{(1 + \vB{r})^{\vC{n}} - 1}$$

“How long will my money last?” rearranges this same relationship to solve for $\vC{n}$ (the number of months) instead, given a withdrawal amount you choose. If your withdrawal doesn’t exceed what the balance is projected to earn in interest each month, the balance never actually reaches zero — this calculator reports that as lasting indefinitely rather than showing a misleadingly large number of years.

The withdrawal mode also shows the widely-cited “4% rule” (4% of the balance per year) for comparison — a well-known rule of thumb, not a guarantee, since real portfolios and lifespans vary.

Worked Example

How much will I have? Starting with a $20,000 balance, contributing $500/month, with a $250/month employer match, an expected 7% average annual return, over 25 years:

1. Growth on your starting balance alone: about $114,508.
2. Growth on your $750/month combined contributions: about $607,554.
3. Projected balance at retirement: $722,062.
4. Of that, you contributed $150,000 and your employer contributed $75,000 — the remaining $477,062 came from investment growth.

How much can I withdraw? With a $1,000,000 balance, an expected 5% annual return in retirement, over 30 years: a level monthly withdrawal of about $5,368 exactly depletes the balance by the end of year 30 — higher than the “4% rule” estimate of $3,333/month, since this figure accounts for the balance continuing to earn a return throughout the drawdown, not just at the start.

Key Factors to Consider

• Sequence-of-returns risk is a real concern this single-average-rate model doesn’t capture. Two retirees with the identical average annual return over 30 years can end up with very different outcomes depending on WHEN the good and bad years happen — a series of poor early returns during the drawdown phase, right when withdrawals are also happening, can deplete a balance faster than the same average return spread evenly across the years.
• Tax treatment of withdrawals varies significantly by account type, and this calculator models the balance itself, not the after-tax amount. A traditional 401(k)/IRA withdrawal is taxed as ordinary income, while a Roth account’s qualified withdrawals are tax-free — the Roth vs. Traditional IRA Calculator explores that specific tradeoff, since it meaningfully affects how far a given balance actually stretches in retirement.
• An employer match is effectively free money, and maximizing it is often the single highest- return move available in a retirement plan. Contributing at least enough to capture a full employer match (before considering any other savings priority) is widely recommended precisely because it’s an immediate, guaranteed return that few other investments can match.
• Required Minimum Distributions (RMDs) can force withdrawals from tax-deferred accounts starting at a certain age, regardless of whether the money is actually needed yet. See the RMD Calculator for how this mandatory withdrawal schedule works — it’s a real constraint on “how much can I withdraw” planning for a traditional (not Roth) retirement account once a retiree reaches the applicable age.

Common Mistakes

• Projecting with a nominal return and ignoring inflation. A 7% average return sounds generous, but prices rise too — the real, inflation-adjusted growth in purchasing power is meaningfully lower than the headline percentage.
• Assuming one fixed annual return every single year. Real markets don’t return the same percentage every year — a single steady rate is a useful simplification for a long-run estimate, not a promise of what any specific year will do.
• Not increasing contributions as income grows. Keeping a fixed dollar contribution for decades means it shrinks as a share of a rising salary — revisiting the contribution amount periodically (e.g. after each raise) keeps the projection realistic.
• Forgetting Social Security or a pension when estimating “how much can I withdraw.” This calculator models withdrawals from the modeled balance alone — other guaranteed income sources in retirement would reduce how much needs to come from savings each month.

Useful to Know

• Want to see when to actually start claiming Social Security? Social Security Claiming Age Calculator shows how claiming early or late changes your monthly benefit.
• Weighing Traditional vs. Roth tax treatment for your contributions? Roth vs. Traditional IRA Calculator compares the two side by side for the same savings capacity.
• Trying to figure out mandatory withdrawals from a traditional account? Required Minimum Distribution (RMD) Calculator calculates your Required Minimum Distribution by age.