You enter a starting balance, an annual interest rate, the number of years, and optional recurring contributions. The tool applies the standard future value formula: FV = PV × (1 + r)^n for the lump sum, plus the future value of an annuity formula for contributions. It assumes a fixed rate with no taxes, fees, or inflation adjustment.
It depends on the investment. High-yield savings accounts typically offer 4–5%, while historical stock market returns average roughly 7–10% annually before inflation. Use a conservative estimate for planning purposes.
Yes, but the difference is often small. Monthly compounding earns slightly more than annual compounding at the same rate. The gap grows with higher rates and longer time horizons.
No. The result is in nominal (future) dollars. To estimate real purchasing power, subtract an assumed inflation rate (typically 2–3%) from your interest rate before calculating.
It's the principle that a dollar today is worth more than a dollar in the future because today's dollar can earn interest. Future value calculations quantify exactly how much more today's dollar will be worth later.
It's a useful starting point. For a more complete picture, you'd also want to factor in taxes, varying contribution amounts, employer matching, and inflation — which a dedicated retirement calculator handles.
Estimate only. Results reflect your inputs and standard formulas. Double-check important decisions independently.