Future value projection
$1,250,000
Total future value
$1,250,000
Total contributions
$200,000
Interest earned
$1,050,000
*Compound growth chart (balance at each year).
Future value: the engine of retirement planning
Future value (FV) tells you what your current savings and monthly contributions will be worth at retirement, assuming a steady rate of return. Compound interest causes your money to grow exponentially – the longer your time horizon, the more dramatic the effect. In our example, a 40‑year‑old with $50k saved, adding $500/month at 7% annual return (monthly compounding) will accumulate over $1.25M by age 65. Total contributions are only $200k, meaning over $1M came from investment earnings.
How compound interest works
The formula for future value of a lump sum is FV = PV × (1 + r)ⁿ. For recurring monthly contributions, we use the future value of an annuity: FV = PMT × [((1 + r)ⁿ − 1) / r]. This calculator combines both, with your choice of monthly or annual compounding. Adding inflation adjustment (optional) shows the purchasing power of that future amount in today's dollars.
Example: Age 40, retire 65 (25 years), $50k now, $500/month, 7% return monthly compounding. Future value = $50k×(1+0.07/12)^(300) + $500×[((1+0.07/12)^300−1)/(0.07/12)] ≈ $1,257,000. Total contributions = $50k + $500×300 = $200,000. Interest = $1,057,000.
Why start early? The last ten years of contributions have less time to compound. This tool shows the yearly progression, motivating consistent saving.
Use these calculations as an informational basis only. Do not make financial, legal, or retirement decisions solely based on these results.
Frequently asked questions
What is future value in retirement planning? It's the estimated amount your savings will grow to by retirement, given assumed returns and contributions.
How does compound interest affect retirement savings? Compounding means you earn returns on both your principal and previously earned interest – it accelerates growth over time.
What rate of return should I use? Many use 6‑8% for a balanced portfolio. Be conservative; you can adjust based on your risk tolerance.
How accurate are future projections? They're estimates based on constant returns; actual markets fluctuate. Use them as a planning guide.
Should I adjust for inflation? Yes, to understand purchasing power. Our optional inflation adjustment shows the real value at retirement.