This tool takes your current balance, a monthly contribution, an assumed annual return, and a number of years, then compounds the whole path monthly to show the balance you would reach and the yearly income that balance could sustain at a 4% withdrawal rate. The single most useful habit with this kind of projection is treating the output as an ordered-of-magnitude planning figure, not a promise, because a constant annual return smooths over decades of real market variation that never actually stays flat.
Reading the projected balance against common benchmarks
Fidelity's widely cited age-based multiples suggest aiming for roughly 3 times salary by 40, 6 times by 50, and 10 times by 67, so if your projected balance clears 10 times your expected final salary you are broadly on the track that guidance describes, and if it falls well short the gap is worth closing with either a higher contribution rate or a longer working period.
The 4% figure the calculator applies to translate a balance into income comes from the historical safe withdrawal rate research popularised by the Trinity study, which tested 30-year retirement periods against US market history; it is a starting reference point rather than a guarantee, and many planners now model somewhere between 3.3% and 4% depending on how long the retirement is expected to last.
A projected balance that produces an income far below your expected spending is telling you something useful now, while there is still time to raise contributions, rather than at 65 when the options have narrowed to working longer or spending less.
Three paths to the same destination, compared
Starting at 100,000 with 500 contributed monthly at a 7% return over 25 years reaches about 977,578, of which 250,000 came from contributions and roughly 727,578 from investment growth; at a 4% withdrawal rate that supports about 39,103 a year.
Starting later but contributing more changes the mix: 250,000 today with 1,500 a month at 5.5% over 15 years reaches about 987,514, a similar endpoint but built from 520,000 in contributions and only 467,514 of growth, because there simply is not enough runway left for compounding to do the heavy lifting.
A smaller starting pot with a long runway shows the opposite pattern: 60,000 with 800 a month at 8% over 30 years grows to roughly 1,848,431, with contributions of only 348,000 producing over 1.5 million in growth. Time in the market, not the size of the first deposit, is doing almost all the work in that scenario.
Why a flat annual return understates the real ride
The calculator applies one constant return every month for the whole period, but real portfolios swing wildly year to year even when their long-run average matches the number you typed in. Two portfolios with the same 20-year average return can finish tens of thousands apart depending purely on the order the good and bad years arrived in, an effect known as sequence-of-returns risk.
That risk bites hardest in the years right before and right after you stop contributing, because a market fall then hits the largest balance you will ever have accumulated and there is no more incoming salary to buy back in cheaply. A flat-rate projection hides this entirely and can make a portfolio that is heavily concentrated in equities look identical in risk to one that is diversified across bonds and cash near retirement.
The projection also assumes contributions and the return rate never change, which is convenient for arithmetic but rarely matches a real career; raises, career breaks, job loss, and fee drag on the underlying investments all move the actual outcome away from the straight compounding curve shown here.
What the model deliberately leaves out
There is no inflation adjustment in this projection, so a balance of 977,578 in 25 years buys meaningfully less than 977,578 today; at 2.5% average inflation, prices roughly double over 28 years, so treat the ending figure as nominal and discount it mentally, or run the numbers again using a real (inflation-adjusted) return in place of the nominal one if you want a like-for-like comparison to today's cost of living.
The result also ignores investment fees, account charges, and any taxes due on contributions or withdrawals, all of which reduce the return you actually keep below the headline rate you enter. A fund charging 1% a year, for instance, is quietly subtracting a return that compounds against you exactly the way the stated return compounds for you.
Finally, the tool assumes contributions arrive on schedule every month for the full period entered. Pausing contributions during a career break, a mortgage stretch, or unemployment is common and shortens the effective compounding window in ways the flat inputs cannot capture unless you re-run the numbers for the shorter contributing period.
Account rules and timing differ by country
In the United States, 401(k) and IRA contribution limits are set annually by the IRS and rise most years with inflation, and early withdrawals before age 59½ typically trigger a 10% penalty on top of ordinary income tax, so the pot this calculator projects is not always freely accessible at any age you choose.
In the United Kingdom, private pensions currently allow access from age 55, rising to 57 from 2028, and the first 25% of most withdrawals is normally tax-free, which changes the effective income available compared with a fully taxable US-style account at the same headline balance.
Whichever jurisdiction applies, the state or government pension you may also receive is not included in this projection at all, so treat the projected private-pot income as one layer of a retirement income stack rather than the whole picture.
Frequently asked questions
- How accurate is a retirement projection calculator?
- It is only as accurate as the constant return and inflation-free assumptions built into it. Over a 20-30 year horizon, real markets produce a wide range of outcomes around any single average return, so treat the output as a midpoint estimate and consider running the same inputs with a lower return to see a more cautious case.
- What return rate should I use for retirement projections?
- A common convention is 5-7% for a diversified equity-heavy portfolio in nominal terms, or 2-4% once inflation is stripped out. Using a lower, more conservative rate than your best-case expectation tends to produce a plan that survives contact with an actual bad decade.
- Is the 4% withdrawal rate still considered safe?
- It remains a widely used starting point drawn from historical US market research covering 30-year retirements, but more recent analysis suggests something closer to 3.3-3.8% is more conservative for very long retirements or for portfolios outside the US market history the original research used.
- Does this calculator account for inflation?
- No. The projected balance and its income figure are both in nominal terms, meaning tomorrow's dollars or pounds, not today's purchasing power. To compare against today's cost of living, either subtract expected inflation from the return rate before entering it or mentally discount the final figure.
- Why does starting early matter more than contributing more later?
- Compounding needs time to multiply, not just money to multiply. In the scenario above, a 60,000 starting balance growing for 30 years at 8% turned 348,000 of contributions into over 1.5 million, while a 15-year window on a much larger starting balance produced barely more growth than the contributions themselves.
- Should I include my employer match or state pension in this projection?
- Include any employer match in the monthly contribution figure, since it compounds the same way your own money does. Leave out the state or government pension, since it is a separate, typically inflation-linked income stream that this projection is not designed to model alongside a private pot.
Sources
- Internal Revenue Service — 401(k) contribution limits — Annual elective deferral limits and catch-up contribution rules for 401(k) plans, updated for the 2025 tax year.
- Social Security Administration — retirement benefits — Explains how claiming age affects the size of the monthly retirement benefit, current guidance as of 2025.
- GOV.UK — pension withdrawal age changes — Confirms the UK normal minimum pension age of 55, rising to 57 from April 2028.