A retirement savings calculator projects what your balance will be at retirement, and - just as importantly - what that balance will actually buy after inflation. The headline number most calculators show you is in future dollars - bigger than it looks, because inflation quietly eats into it every year between now and retirement. This shows both numbers side by side.
A dollar today and a dollar in thirty years are not the same thing, even before inflation - because a dollar today can be invested and grow, while a promised future dollar can't. Present value is the answer to: "how much would I need today to end up with that future amount?" It's the mirror image of compound growth - instead of asking what an amount grows into, it asks what a future amount is worth right now.
The formula is compound interest run backwards: PV = FV ÷ (1 + r)n, where FV is the future amount, r is the rate per period, and n is the number of periods. Use your real (inflation-adjusted) return for r, and the answer tells you what a future balance is genuinely worth in today's purchasing power - exactly what the toggle above is doing with your projected retirement balance.
This is also why "the market has historically returned 7-10%" can be misleading on its own. What matters for planning is the real return: your return rate minus inflation, since that is the rate your purchasing power is actually growing at. A 7% return during 3% inflation is really only about a 3.9% gain in what your money can buy.
Comparing a house price today against a salary from 20 years ago, or reading a pension quote in "future dollars", misleads for the same reason. It is also the principle a properly built NPV or IRR calculation applies to any set of cash flows spread over time, not just a single lump sum. Buying a rental property is the obvious case: money goes out at purchase and comes back over years of income plus an eventual sale.
This varies more by country than most people realize - and not just in the number, but in what kind of number it is. Some countries mandate a minimum; others just publish guidance; one defines a ceiling on tax-advantaged saving rather than a target at all. Treat these as reference points, not rules - your own number depends on your age, existing savings, and when you plan to stop working.
| Country | System | Typical figure | What kind of number |
|---|---|---|---|
| Australia | Superannuation Guarantee | 12% of earnings | Mandatory employer floor |
| United Kingdom | Workplace pension auto-enrolment | 8% of qualifying earnings (3% employer + 5% employee) | Mandatory combined floor |
| United States | 401(k) / employer plans | 15% of pre-tax pay, including employer match | Voluntary guidance, not a mandate |
| Canada | RRSP | Up to 18% of prior year's earned income | A contribution ceiling, not a target |
Australia's 12% is the rate employers are legally required to pay on top of wages. It reached its final legislated level on 1 July 2025 with no further increases scheduled (Australian Taxation Office).
The UK's 8% is also a legal minimum, split between employer and employee and applied to earnings within a set band. It is set out under the Pensions Act 2008 and enforced by the statutory pensions regulator (The Pensions Regulator).
The US has no equivalent figure at all. No regulator publishes a target savings rate the way Australia and the UK mandate one. The IRS sets contribution limits rather than a recommended rate, and the Department of Labor's guidance stops at general planning tools. The often-quoted 15% is a rule of thumb from the retirement plan industry, not a government figure, and is best treated as informal context.
Canada's 18% is different in kind from the other three. It is the maximum you are allowed to contribute to an RRSP tax-deductibly, up to an annual dollar cap. There is no minimum at all, and the figure is set out directly in the Income Tax Act (Canada Revenue Agency).
Whichever system you're in, an employer match is close to the best return available anywhere - it's an immediate, guaranteed gain before the money has even been invested. If your plan offers one, contributing enough to capture the full match is usually worth doing before anything else on this page.
It depends on your current balance, what you contribute, the return you assume and how long you have. The more useful figure is what that balance will buy: a projected $894,313 in 30 years is worth about $368,445 in today’s money at 3% inflation.
Because it compounds against you over the same decades your savings compound for you. Over 30 years at 3%, prices roughly double and a bit more, so a balance that looks large in future dollars buys far less than the number suggests.
The nominal return is the rate your account actually shows growing. The real return subtracts inflation, showing how much your purchasing power actually grew. A 7% nominal return during 3% inflation is roughly a 3.9% real gain - the nominal figure is what appears on a statement, the real figure is what it can actually buy.
A widely cited guideline, originating from research by William Bengen in 1994 and popularized by the 1998 Trinity Study, suggesting a retiree can withdraw 4% of their starting portfolio in year one, then adjust that dollar amount for inflation each year after, with a good historical chance of the money lasting 30 years. It implies needing roughly 25 times your annual spending saved - but it is a US-based historical rule of thumb, not a guarantee, and later research has questioned whether it holds over longer retirements or in different rate environments.
No - this models only the account balance you are actually contributing to. Government pension or Social Security income is a separate, typically inflation-linked income stream on top of whatever this account produces, and should be added to your overall retirement income picture separately rather than folded into this projection.
Dollar-cost averaging means investing a fixed amount at regular intervals regardless of market conditions, so you buy more units when prices are low and fewer when high. This calculator already assumes regular contributions at a steady assumed return, which is the simplified, smoothed-out version of what dollar-cost averaging produces in reality - real markets will not move in the straight line this projection assumes.