If I have $10,000 in my retirement account, contribute $2,400 a year, and plan to earn 8% interest on average each year, what will my investment be worth at retirement? For many, this question would make their head spin, and to be completely honest, the equation to figure this out is pretty ugly:

My first suggestion would not be to sit down and plunk each of your numbers into this formula. Not only would that be time consuming, but I assume that many of us would come up with incorrect answers. And, when dealing with our future retirement accounts, we certainly do not want to make a mistake with our investment calculations! After all, it’s pretty important…

**Use an Online Investment Calculator**

If all of the variables make sense to you and you can appropriately place each of your numbers into an investment calculation tool, then I would suggest heading over to a site like Dave Ramsey’s Investment Calculator to see what pops out as a result. His tools are very good and will clearly show where you’ll stand in your retirement years.

You just have to enter your starting balance, your expected annual rate of return, your monthly contribution, and the number of years you plan to contribute. Then presto! You’ve got your retirement fund estimate. It’s pretty slick, but you do need to understand your numbers and have a computer nearby.

**Calculating in Your Head: What will my investment be worth at retirement? **

If these numbers don’t necessarily make sense, or if you’d rather just get a rough estimate in your head, then I’ve got the solution for you! Take a look at how you can quickly calculate your retirement with the options below.

**Estimating the Growth of a Lump Sum**

Let’s say that you have $20,000 in your retirement account, but are wondering what it would turn into if you left it in the fund and stopped contributing. How would you calculate this? It’s actually pretty easy with the tables I came up with. Assuming you can earn 8% interest each year, just use the multiples below to see what your $20,000 would turn into:

If you have $20,000 and have 10 years until retirement, just multiply by 2. If left alone without contributing, your $20,000 will likely turn into $40,000.

$20,000 x 2 = 40,000

Simple right?

If you are 40 years away from retirement, then you can expect your $20,000 to grow by 20 times, to $400,000.

$20,000 x 20 = $400,000

If you have a sum of money earning interest, but no contributions, just use this table to figure out how much you’ll likely have when you retire!

**Estimating Growth of Yearly Contributions**

What if you’re thinking about contributing to a retirement account and are wondering how much you should add into the fund each year? I have made this super simple as well. Again, check out the table below:

Let’s say you’re thinking about contributing $1,000 per year. What would this turn into after 10 years of contributing? Just multiply your yearly contribution by 15 (per the above table):

$1,000 x 15 = $15,000

What if you contributed $1,000 per year for 40 years?

$1,000 x 280 = $280,000

Pretty easy right? That’s exactly what I was going for. Nobody wants to stop and think about complex equations when considering their retirement fund. In fact, that’s probably why many people never contribute in the first place! Use the multiples above and calculate your future retirement fund growth with ease.

**What If I Have Money in My Fund AND I’m Contributing Each Year?**

What will my investment be worth at retirement if I have $20,000 in my account AND I’m contributing $1,000 per year for the next 40 years? How would I figure THAT out?

Again, this is super simple (trust me). Just calculate the $20,000 growth using the first method, then calculate the $1,000 per year growth using the second method, and add those amounts together! Take it in two steps:

$20,000 x 20 (the first table multiple for 40 years) = $400,000

PLUS

$1,000 x 280 (the second table multiple for 40 years) = $280,000

EQUALS

**$400,000 + $280,000 = $680,000**

**Start Investing Today**

No longer do you have the excuse of complexity when it comes to figuring out your future retirement dollars. Simply think about how much you have in your account and how much you’d like to contribute and use the multiples to figure out the future dollars! Simple. Easy. And if you’re at all like me (somewhat nerdy), a little fun!

*Use these calculations for yourself and figure out your potential retirement fund value!*

#### AUTHOR **Derek **

My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.

## 8 Comments

Nice breakdown. Looking at the first equation would cause many people to run the other way. But you did a nice job of showing some simple tools and resources to get to the answer (or a quick estimate) without much work or math skill required!

Hopefully many people find these tables and are less intimidated about figuring out how to get to their desired retirement number. Thanks for the comment, Jon!

Derek, This was so useful and easy to use. Thanks so much. I enjoy your work so much.

Beautiful! I was really hoping this would help some people out! Glad you were one of them. 🙂 Thanks for letting me know Carolyn.

Often people think they need financial expertise to figure all this out. Thanks for showing how simple it can be – very helpful.

My pleasure! Finance can often be presented as very confusing, but it doesn’t have to be! 🙂

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