Boneyard Tools

How your retirement corpus is built

Why compounding, contribution timing and the withdrawal rule shape your nest egg, and how to read a nominal retirement projection.

Open the Retirement Calculator →

Two engines: your lump sum and your contributions

A retirement projection is really two calculations added together. The money you already hold grows as a single lump sum, multiplying by one plus the return, raised to the number of years you stay invested. On top of that, every monthly deposit you make starts its own smaller growth clock the moment it lands. Early contributions compound for decades while the last few barely grow, which is why the total contributed and the final corpus can look so different.

Why starting early beats saving more

Time in the market usually outweighs the size of each deposit. In the examples above, a saver who begins at 25 with just 300 a month ends near 465,000 after 35 years, and roughly 334,000 of that is pure growth rather than cash paid in. Someone who waits and contributes far more still has fewer years for compounding to work, so the growth portion of their pot is proportionally smaller. The lesson is that the first decade of saving does the heaviest lifting.

Nominal versus real: the inflation gap

This calculator reports a nominal figure, meaning it ignores inflation. A million-dollar corpus three decades out will not stretch as far as a million today, because rising prices erode purchasing power along the way. A practical fix is to lower your assumed return by your expected inflation rate to get a rough real projection, or simply to remember that the headline number is in future money. Taxes on withdrawals and ongoing fund fees will trim it further.

Turning a corpus into retirement income

A projected pot only matters once you know how much income it can safely provide. The widely cited guideline is the 4 percent rule, which suggests withdrawing about 4 percent of the balance in your first year and adjusting for inflation after that. Flipped around, it means you need roughly 25 times your desired annual spending saved up. Use the calculator in reverse: pick a target corpus from your spending needs, then tune the monthly contribution until the projection meets it.

Frequently asked questions

Should I use a higher or lower return for safety?

Planning with a slightly conservative return, say 6 percent rather than 9, builds in a margin so you are less likely to fall short. If real returns come in higher, you simply arrive at your goal early, which is the safer way to be wrong.

Does the calculator model stopping contributions before retirement?

No. It assumes the same monthly amount every month until your retirement age. To model a break, run two projections and add the results, or lower the monthly figure to an average across the whole period.