Enter your current age, retirement age, current savings, monthly contribution, and annual interest rate into the calculator to determine your total savings at retirement.
Savings Retirement Plan (SRP) Formula
The following formula is used to calculate the total savings at retirement:
FV = P * ((1 + r)^n - 1) / r + C * (1 + r)^n
Variables:
- FV is the future value of the savings at retirement
- P is the current savings
- r is the monthly interest rate (annual interest rate divided by 12)
- n is the total number of contributions (months until retirement)
- C is the monthly contribution
To calculate the total savings at retirement, use the formula to determine the future value of both the current savings and the monthly contributions.
What is a Savings Retirement Plan (SRP)?
A Savings Retirement Plan (SRP) is a financial strategy designed to help individuals save for retirement. It involves setting aside a certain amount of money each month and investing it to grow over time. The plan takes into account factors such as current age, desired retirement age, current savings, monthly contributions, and the expected annual interest rate. The goal is to accumulate a sufficient amount of money to support oneself during retirement.
How to Calculate Savings for Retirement?
The following steps outline how to calculate the total savings for retirement:
- Determine your current age and the age at which you plan to retire.
- Input your current savings amount.
- Decide on the amount you will contribute monthly towards your retirement savings.
- Enter the expected annual interest rate of your investments.
- Use the SRP formula to calculate the future value of your savings at retirement.
- After inserting the variables and calculating the result, check your answer with the calculator above.
Example Problem:
Use the following variables as an example problem to test your knowledge.
Current Age = 30 years
Retirement Age = 65 years
Current Savings = $50,000
Monthly Contribution = $500
Annual Interest Rate = 5%