Ritholtz Wealth Management’s retirement savings calculator estimates the balance your current savings and monthly contributions could reach by retirement. Enter your figures, then test the result as an illustration, not a forecast.
A calculator can do the multiplication perfectly and still answer the wrong question. The useful work is choosing inputs that reflect a diversified, long-term investment plan rather than the last exciting market year.
The calculator compounds one month at a time
The Savings Calculator starts with your current savings, divides the annual return you enter into monthly growth, and applies that growth to the running balance each month. It then adds your monthly contribution at the end of that month, repeating the process for every month until retirement.
Inflation does not change the future balance shown. It converts that balance into an estimate of its buying power in today’s dollars, which is usually the figure that makes a retirement date easier to judge.
The example uses $150K already saved, $1,250 added each month, and an assumed 5% annual return compounded monthly. The gap between estimated value and money put in is investment growth in this illustration.
This illustration adds $375K in monthly deposits over 25 years, on top of the initial $150K.
| After years | Estimated value | Money you put in |
|---|---|---|
| 4 | $249,403 | $210,000 |
| 8 | $370,763 | $270,000 |
| 12 | $518,932 | $330,000 |
| 16 | $699,830 | $390,000 |
| 20 | $920,688 | $450,000 |
| 24 | $1,190,332 | $510,000 |
| 25 | $1,266,581 | $525,000 |
How much weight should you put on the estimate?
Treat the result as a range-testing tool, not a retirement verdict: a useful result still holds up when you lower the return, keep inflation realistic, and compare the today’s-dollar balance with a separate spending estimate, while a worrying one forces a choice among saving more, working longer, or spending less.
For an analytically minded investor, the deposits-versus-growth split is a useful diagnostic. If nearly all of the ending value depends on growth, the plan is sensitive to market results. If regular deposits do more of the work, you have more control over the outcome.
Shortcut: if your retirement date works only after you enter a return you cannot defend as a diversified long-term assumption, change the savings rate, retirement date, or spending estimate before changing the return. Ritholtz Wealth Management would rather test a few sober assumptions than build a plan around a hot tip.
Every investment can lose value, including the money you originally put in, so the displayed balance cannot promise a retirement outcome.
Run a lower-return version before treating a result as usable.
What does the calculator leave outside the math?
The calculator leaves out taxes, different account rules, employer benefits, Social Security choices, pensions, health costs, and the order in which you might spend from accounts. It also cannot tell you whether a concentrated employer-stock position or a fund mix fits the risk you can actually live with when markets fall.
Ritholtz Wealth Management puts long-term research and diversification ahead of market calls. Before Ritholtz Wealth Management suggests a fund change, it would compare the holding’s job in the portfolio, concentration risk, fund costs, and taxes that selling could create.
A real retirement plan also separates taxable savings from tax-deferred and Roth accounts. Combining them in this calculator is fine for a first estimate, but they do not all create the same spendable dollars later.
Use the calculator for the estimate, then use account details to test whether the estimate is spendable.
- Account types: Keep a separate note of taxable, tax-deferred, and Roth balances.
- Concentrated shares: Measure the position against your total investable savings before assuming it behaves like a diversified fund.
Your questions about Ritholtz Wealth Management, answered
Does a retirement savings calculator tell me if I can retire?
No, a retirement savings calculator estimates an account balance, not whether that balance will cover your spending for life. Compare the inflation-adjusted result with a separate estimate of annual spending, taxes, and other income. Ritholtz Wealth Management treats the calculator as one input, then examines the assumptions behind it.
Why is the amount in today’s dollars lower than the retirement balance?
The today’s-dollar amount is lower because inflation reduces purchasing power over time. The calculator takes the future balance and restates it using the inflation rate you entered. That figure is useful for comparing a future account balance with today’s housing, food, travel, and health-care costs.
Can I combine my 401(k), IRA, and taxable account in one calculation?
Yes, you can combine account balances for a broad savings estimate because the calculator needs a starting total. Keep a separate account-by-account list, though, because withdrawals from taxable, tax-deferred, and Roth accounts can have different tax effects and available amounts.
What annual return should I enter in the calculator?
Use a long-term assumption you can explain from a diversified portfolio, then test lower and higher versions of that assumption. Do not use the calculator to extend a recent winning streak indefinitely. Ritholtz Wealth Management favors long-term research over trying to predict the next market move.
A rosy return input can do real damage
Annual return is the input people most often overstate. A recent run of unusually strong returns can look persuasive on a spreadsheet, but compounding turns a small assumption error into a large difference after 20 or 25 years.
Do not enter an after-inflation return and then also enter inflation, because that counts inflation twice. Keep the pair consistent: use a nominal expected return with an inflation estimate, then compare the today’s-dollar output across several assumptions.
Ritholtz Wealth Management uses the calculator as a starting point for questions worth checking, not as a machine for declaring that you are done saving.
Save the assumptions beside the result. A retirement number without its inputs is mostly decoration.
This article provides general information only and is not individualized investment, tax or legal advice. Investing involves risk, including the possible loss of principal. Talk to a qualified professional about your specific situation before making any financial moves.