See what your money becomes.

Most of the balance is not your money

Over 30 years you put in $10,000 up front and $190,000 in contributions, so $200,000 of your own money goes in. The ending balance is $691,150. The difference, $501,150, is return, and it is two and a half times everything you deposited.

That ratio is what people mean by letting money work. It also explains why the early years feel so unrewarding: the return in year one is a few hundred dollars, because returns are earned on the balance, and at the start there is barely any balance to earn them on.

Time matters more than the amount

Because each year's growth compounds on the last, the final years do disproportionate work. Drag the horizon slider on this page and watch: the last decade of a 30-year run adds far more than the first decade did, despite identical contributions, because it is compounding on a balance that took twenty years to build.

The practical consequence is that starting earlier beats contributing more, within reason. Ten years of delay cannot be repaired by raising your contribution, because what you lost was not the deposits, it was the compounding those deposits would have done.

Inflation halves the answer

$691,150 in thirty years is not $691,150 in today's money. At 3% inflation it buys what $284,745 buys now, which is less than half. This page shows both figures on purpose, because a projection quoted only in future dollars flatters itself.

The useful way to think about it: a 7% nominal return with 3% inflation is roughly a 4% real return. Real return is the only one that buys anything, and it is the number to use when you are working out whether a portfolio actually supports the retirement you have in mind.

Compounding frequency matters, but it hits a ceiling fast

A rate quoted as 7% is usually a nominal rate, and compounding it monthly makes the effective rate about 7.23%. Over thirty years that gap compounds into real money. On the defaults here, annual compounding ends at $660,849 against $691,150 for monthly, a difference of $30,301.

After that first step the gains shrink quickly. Daily compounding reaches $694,017, only $2,867 more than monthly, and continuous compounding, which is the mathematical limit, adds a further $98. Monthly is already close to the ceiling. The practical lesson is to compare the effective annual rate rather than the headline rate, because two products quoting the same nominal number are not offering the same deal.

What this calculator leaves out

The largest omission is that real returns are not smooth. This model applies the same 7% every year. Markets deliver 20% one year and negative 15% the next, and the order those arrive in changes the outcome badly once you start withdrawing. The retirement simulator on this site exists specifically to show that effect, and it is the honest companion to this page.

It also ignores fees and taxes. A 1% annual fee does not cost 1%, it compounds against you for the whole period and can take a sizable share of the final balance. Taxes depend on the account: a 401(k) or IRA defers or avoids them, a taxable brokerage account does not.

Unfamiliar term? The course glossary defines the fifty this site actually uses, in the sense this site uses them.