Methodology & Accuracy
Every calculator on RetireCalculator.net is powered by a small, tested calculation engine. This page documents the formulas, the conventions we chose, and — just as importantly — the simplifications each model makes, so you can judge how far to trust a number.
The core formula
Almost everything here reduces to the future value of a series. A starting balance grows by a monthly rate r (the annual return divided by 12) over n months, and each contribution grows for the months remaining after it is made:
FV = P·(1+r)ⁿ + PMT·[((1+r)ⁿ − 1) / r]
The first term compounds your existing balance; the second is the standard annuity formula for a
stream of level contributions. A 0% return degrades gracefully to simple addition. The Savings
Goal Calculator runs this same equation in reverse, solving for the contribution
PMT that reaches a target. The Compound Interest Calculator uses the general form
FV = P·(1 + rate/m)^(m·t) so it can compound at any frequency m — daily through
annual.
Simulated where a formula won't do
Two models can't be captured by a single closed-form expression and are simulated month by month instead. The 401(k) Calculator steps through each month so that salary growth and the employer-match cap are applied correctly as pay rises. The retirement drawdown steps through retirement applying investment growth and then the withdrawal each month, escalating the withdrawal annually for inflation; if growth covers the withdrawals, the balance is reported as never exhausted rather than forced to a finite number.
Conventions
- Monthly compounding. Except where you choose otherwise on the Compound Interest Calculator, growth compounds monthly at the annual rate ÷ 12.
- End-of-month contributions. Contributions are treated as arriving at the end of each month unless a begin-of-month option is offered and selected.
- Nominal dollars. Balances are shown in future (nominal) dollars. To see purchasing power in today's dollars, enter a real (after-inflation) return.
- Constant return. Each projection assumes a single, steady rate of return. Real markets vary year to year, which the models do not attempt to simulate.
What the models do not include
These are planning tools, not tax or investment engines. They do not model taxes, Social Security, pensions, investment fees, contribution or income limits, or the sequence-of-returns risk that comes from variable real-world returns. Each calculator's page states its own key omissions, and every finance page carries a "not financial advice" note. Treat the output as a way to understand the shape of a decision, not as a guarantee.
Worked examples can't drift
The numbers in each page's explanation — every "grows to about $X" — are computed at build time by the very same engine that runs the interactive calculator, not typed in by hand. If the calculation logic ever changed, the copy would change with it (or the build would fail), so the documentation cannot silently disagree with the tool.
Tested against reference figures
The engine is covered by automated tests that check it against independently computed reference values — for example, $10,000 plus $500 a month at a 7% return for 30 years growing to about $691,150, or a $5,000 balance reaching a $50,000 goal in five years at 4% requiring about $662 a month. If you believe a result is wrong, that is exactly the kind of report we want: see the contact page, and confirmed issues are fixed in the engine and locked in with a new test.