Deposits and investment growth are separate
A pension contribution calculation separates money actually added from investment growth. It does not estimate a government pension, a workplace match, an annuity quote, or a safe withdrawal amount. The useful question is whether a stated saving habit, starting balance, and time horizon produce a plausible pool of money.
Monthly compounding of an opening balance
Monthly rate is annual return ÷ 12 ÷ 100. The opening balance is multiplied by (1 + monthly rate) for every month. The contribution series is monthly contribution × ((1 + monthly rate)^months − 1) ÷ monthly rate. Adding the two components gives the displayed balance; at a zero rate, contributions are simply added.
A 22-year retirement projection
At 6%, the monthly rate is 0.5%. Twenty-two years means 264 months. The $85,000 opening balance grows to about $317,000. Depositing $900 at month end adds $237,600 of cash and grows to roughly $492,000. Together they make about $809,000. Deposits made at the beginning of a month would earn one extra month and give a slightly higher result.
Testing a saving habit
Use it to compare raising a contribution by $100, delaying retirement by two years, or starting from the balance shown on a statement. Keep salary-linked matching and tax treatment outside the estimate unless their amounts are known. A second run at 4% and 7% shows how dependent a long horizon is on the return assumption.
Why a projected balance can differ
Inflation, fund charges, tax, employer matching, contribution limits, withdrawals, changing salary, and market losses are not inferred. Returns do not arrive in smooth monthly instalments; the monthly compounding is a projection convention. A retirement account can fall in value immediately before the planned date.
Retirement-account entries that distort the result
Do not enter 0.06 for 6%, or an annual contribution in the monthly field. Do not count an employer match twice by adding it to both the current balance and the monthly deposit. Use the current vested balance rather than a historical high.
What this projection does not plan
This page builds a savings balance from repeated retirement deposits. A 401(k) tool may model a specific employer match, while a FIRE calculation begins with an annual spending target and a withdrawal-rate assumption.
Separate the controllable deposits from the assumption
At the default 6% rate, $85,000 compounds for 264 months to $317,145.99 and $900 end-of-month deposits grow to $491,603.28, totaling $808,749.27. Personal cash contributed is $322,600; the remaining $486,149.27 is modeled growth, which explains the sensitivity to return and time. A 4% scenario is about $625,000 and an 8% scenario about $1,067,000, neither of which is a promise. Use the current vested statement balance and avoid counting an employer match already included in it. If the entered return is a gross market assumption, fund fees reduce the retained return; do not subtract an expense ratio twice from historical performance already reported net of expenses. The result is future nominal dollars, not a retirement-income guarantee. Inflation, taxes, contribution limits, healthcare, pensions, withdrawal timing, and sequence-of-returns risk need a separate spending and withdrawal analysis. Update inputs after each statement instead of assuming a missed return will be recovered on schedule.
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