Retirement Calculator

How this is calculated

Your current savings and monthly contributions compound at the return you set until retirement; the annual income figure applies the 4% rule to the resulting nest egg.

Worked example: $50,000 plus $800/month at 7% for 30 years → a nest egg around $1.1 million, supporting roughly $44,000/year at 4%. Contributing more, or earlier, moves both numbers sharply.

Why the contribution rate matters more than the return

Retirement projections are dominated by two things, and most attention goes to the less important one. The return you earn is largely outside your control and mostly determined by markets; the proportion of income you save is entirely within it. Over a thirty-year horizon, raising a contribution from 10% to 15% of salary typically moves the final balance more than a full percentage point of extra annual return — and unlike the return, you can decide it this month.

Time is the other lever, and it is front-loaded. Money invested at 25 compounds for forty years; money invested at 45 compounds for twenty. Because compounding is exponential, the first decade of contributions frequently accounts for a disproportionate share of the final balance, which is the whole argument for starting badly rather than starting late.

What the projection quietly assumes

A single growth rate applied smoothly for decades is a convenience, not a description of markets. Real returns arrive as a sequence with good and bad years, and the order matters enormously once you begin withdrawing — a severe fall in the first years of retirement does far more damage than the same fall later, because you are selling assets to live on while they are depressed. This is sequence-of-returns risk, and no smooth projection can show it.

The projection is also in nominal money. A figure of R12 million in 2056 sounds transformative and, at 6% inflation, buys roughly what R2 million buys today. Run the result through an inflation calculator before deciding it is enough.

Turning a balance into an income

The common rule of thumb is that withdrawing about 4% of the initial balance a year, adjusted for inflation, has historically survived a 30-year retirement in most periods. It was derived from US market history and is contested: critics argue it is too high for lower-return environments or longer retirements, and too low for people willing to adjust spending in bad years. Treat it as a way to convert a balance into a rough income — R5 million supports roughly R200,000 a year — rather than a guarantee.

What this calculator cannot include

Tax treatment differs enormously by country and by vehicle, and it changes the answer more than most people expect: contributions may be deductible, growth may be sheltered, withdrawals may be taxed as income or partly tax-free. Employer matching is free money and should be captured in full before any other investing decision. State pensions, annuity rates and preservation rules on job changes all matter and none of them fit in a general calculator. Use this for the shape of the problem, then get the specifics from someone who knows your jurisdiction.