WizeLife
Exact figures from the future-value annuity formula. No signup required.
PMT = FV × r / ((1+r)^n − 1) where r = 0.07/12 and n = months to age 55.
The future-value of an ordinary annuity formula computes how much a series of equal monthly contributions grows to, given a fixed return. Rearranged to solve for the monthly contribution (PMT):
The verification: multiply PMT back using the forward formula FV = PMT × ((1+r)^n − 1)/r and you get exactly $1,000,000 in each scenario.
Starting at 30 vs 40 cuts the required monthly saving by 61% — from $3,155 to $1,234. The first decade of compounding is the most valuable decade.
At 5% return (age 30 start), you'd need $1,882/mo instead of $1,234. Each extra percentage point of return meaningfully lowers the required contribution.
If you already have $100K saved at age 30, it grows to ~$543K by 55 at 7% — meaning you only need to accumulate another $457K, cutting your PMT to ~$564/mo.
At 3% annual inflation, $1M in 25 years buys ~$480K in today's dollars. To preserve purchasing power, target $2M+ nominal, or use a real (inflation-adjusted) return of ~4% in your math.
These calculations assume a fixed nominal return with monthly compounding and no taxes, fees, or inflation adjustment. Your real required savings will differ based on taxes, investment fees, Social Security or pension income, healthcare costs, and actual market returns. Use this as a starting point, then model your specific situation with a financial planner or a tool like WizeMoney.
WizeMoney's simulator lets you map out your complete retirement plan: pension projections, investment growth, monthly income in retirement, safe-withdrawal modeling, and more. Free, no signup required to start.
Open WizeMoney free →Does starting age really matter that much?
Yes. Starting at 30 vs 40 cuts the required monthly contribution by over 60% — from $3,155 to $1,234. The reason is compounding: an investment at 7% doubles roughly every 10 years. Starting earlier means your money has more doubling periods. The first decade is disproportionately valuable.
What return rate should I use?
7% nominal is a conservative-to-moderate assumption based on long-run US equity market returns (~10% nominal minus ~3% inflation = 7% real). For planning purposes, many advisors use 5–7% to be safe. Higher returns require lower monthly savings, but are harder to guarantee. The higher the assumed return, the more sensitive your plan is to underperformance.
Is $1M enough to retire at 55?
At the 4% safe-withdrawal rate, $1M produces ~$40,000/year. Retiring at 55 means 30–40 years of withdrawals — longer than the 30-year horizon the 4% rule was designed for. Many planners recommend 3–3.5% for early retirees, giving $30,000–$35,000/year. Whether that is adequate depends on your location, lifestyle, and supplemental income sources.
What about inflation?
At 3% annual inflation, $1,000,000 in 25 years has only ~$480,000 in today's purchasing power. If you want $1M in today's purchasing power at age 55, you should target approximately $2,090,000 nominal (for a 25-year horizon), or use a lower real return (e.g. 4%) in your PMT calculation. The scenarios above are nominal and do not adjust for inflation.
How do taxes affect this?
In a tax-advantaged account (401k, IRA, Roth IRA, ISA, pension), growth compounds tax-free or tax-deferred — meaning the 7% return is largely preserved. In a taxable account, dividend and capital-gains taxes reduce your effective return each year. The figures on this page assume pre-tax nominal growth, consistent with contributions to a tax-advantaged retirement account.
WizeMoney builds your personal pension projection — actual savings, expected returns, and the exact age you can retire. AI-powered, 4 languages.
Open free account ←