Worksheet

Retirement savings gap worksheet

This worksheet shows what your own typed numbers add up to. It supplies no return, no target and no contribution amount. You choose every input, and every result is a hypothetical illustration, not a forecast or a recommendation.

The formula in words

The worksheet assumes you add the same amount at the end of every year and that your savings grow at one steady yearly rate. With a rate of r written as a fraction (5 percent is 0.05) and n whole years:

• Growth of what you have now: savings today multiplied by (1 + r) raised to the power n.
• Growth of what you add: the yearly amount multiplied by ((1 + r) to the power n, minus 1), divided by r.
• Projected balance: the sum of those two parts.
• Gap: your target minus the projected balance. A positive number is a shortfall, a negative number is a surplus.

If you type a return of exactly zero, the formula becomes simple addition: savings today plus the yearly amount times n. The worksheet also shows the extra yearly amount that would close a shortfall if every other number stayed the same. That is the gap divided by the same yearly-growth factor used above.

Using it well

Run it more than once. Try a lower return, a later start, or a smaller yearly amount to see how sensitive the answer is. If the shortfall disappears only under an optimistic return, that tells you something about how fragile the plan is. If you are unsure which return to type, a zero percent run is a useful floor for comparison, because it shows only what you put in.

The target is also yours to define. Some people think in a lump sum, others in yearly spending. Our guide on knowing whether you are on track without a perfect number explains why a single target is a rough tool, and why ranges are more honest.

What the worksheet does not do

• It does not adjust for inflation, so a future dollar amount buys less than the same number today. You can approximate this by typing a return after inflation, but that is your assumption, not ours.
• It does not model taxes, account fees, employer contributions you have not typed in, or yearly changes in what you save.
• It does not include Social Security or pension income. Those arrive as income, not as a balance, and are covered in the Social Security claiming guide and the pension guide.
• It does not model withdrawals, so it says nothing about how long a balance will last.

Contributions to retirement accounts are subject to rules and limits that change over time. This tool does not check them. Confirm the current rules with your plan administrator or the IRS before relying on any yearly amount you type here.

Where this comes from

The projected balance uses the standard future value formulas for a lump sum and for a series of equal end-of-period payments, the same arithmetic used in introductory finance texts. It is plain arithmetic that we worked through and checked against hand calculations and an automated test of many input combinations. The caution that returns are uncertain is a standard theme of investor education from the SEC. Nothing here is drawn from a particular account or product. This is general information, not financial, tax or legal advice.

Go deeper

• What to prioritize in your 40s if retirement feels underfunded
• What you need to retire early
• 401(k) match worksheet
• Retirement planning by decade checklist