Transparent method
The formula
Worked example
Example inputs
How to interpret the result
The saving rate required to hit a retirement target is genuinely sensitive to three separate levers, assumed investment return, employer contribution, and retirement date, and testing each one independently reveals which lever actually has the most realistic room to close a gap, rather than assuming more personal saving is the only option available.
Before you rely on it
What to check
Test employer contribution, assumed return and retirement date as three separate levers, since adjusting any one of them changes the required personal contribution differently.
The common error
Where people go wrong with required retirement contribution calculator
Assuming increased personal contribution is the only lever available to close a retirement savings gap. Adjusting the retirement date or assumed return can move the required contribution meaningfully, sometimes more than a modest increase in saving alone would.
Sensitivity evidence
How expected annual return changes the required employee contribution per year
| Expected annual return | Required employee contribution per year | Required employee contribution per month | Future employer contributions |
|---|---|---|---|
| 4.0% | $15,015 | $1,251 | $208,230 |
| 5.0% | $8,691 | $724 | $238,635 |
| 6.0%worked example | $2,783 | $232 | $274,323 |
| 7.0% | $0.00 | $0.00 | $316,245 |
| 8.0% | $0.00 | $0.00 | $365,530 |
Every input, tested
Which input moves the required employee contribution per year most
| Input | Tested from | To | Required employee contribution per year at each end | Swing |
|---|---|---|---|---|
| Expected annual return | 5.0% | 7.0% | $8,691 to $0.00 | $8,691 (312%) |
| Years until retirement | 19.0 years | 31.0 years | $17,026 to $0.00 | $17,026 (612%) |
| Retirement target | $1,350,000 | $1,650,000 | $49 to $5,517 | $5,468 (196%) |
| Current retirement savings | $225,000 | $275,000 | $4,739 to $828 | $3,911 (141%) |
| Annual employer contribution | $4,500 | $5,500 | $3,283 to $2,283 | $1,000 (36%) |
Two variables at once
Required employee contribution per year by expected annual return and retirement target
| Expected annual return \ Retirement target | $1,200,000 | $1,500,000 | $1,800,000 |
|---|---|---|---|
| 4.0% | $7,811 | $15,015 | $22,219 |
| 5.0% | $2,405 | $8,691 | $14,976 |
| 6.0% | $0.00 | $2,783 | $8,251 |
| 7.0% | $0.00 | $0.00 | $2,006 |
| 8.0% | $0.00 | $0.00 | $0.00 |
Step by step
The worked example, input by input
| Input | Value used |
|---|---|
| Retirement target | $1,500,000 |
| Current retirement savings | $250,000 |
| Expected annual return | 6.0% |
| Years until retirement | 25.0 years |
| Annual employer contribution | $5,000 |
| Required employee contribution per year | $2,783 |
| Required employee contribution per month | $232 |
| Future employer contributions | $274,323 |
Where the inputs come from
Retirement target is the balance you want at retirement, from the retirement goal or FIRE calculators. Current retirement savings is your combined balance today, expected return is your assumption after fees, and years until retirement sets the time. Annual employer contribution is the match or profit sharing you expect each year, which reduces what you must save. Use realistic figures, since employer contributions may vest over time.
Using the required employee contribution per year in a real decision
If the figure is out of reach, lengthen the horizon, lower the target or raise the return assumption cautiously.
When the result stops applying
Assumes contributions at the end of each period and a steady return. Raising your savings later in life requires far larger amounts, so the estimate is sensitive to the horizon. The target is in future dollars unless you inflate it, and contribution limits cap what a workplace plan or IRA will accept, which can be binding for large targets.
What to compare it with
Check the retirement savings calculator to see the projection from a chosen contribution, and the 401(k) match and contribution pages for limits. The coast FIRE calculator shows the balance at which further saving is unnecessary. Automate the increase with each raise.
People also ask
Frequently asked questions
How much should I save each month for retirement?
A common target is 15% of gross income including employer match, but the right amount depends on your current savings, target and years left.
Does starting later change the amount a lot?
Yes. Ten fewer years of growth can double the required monthly saving, which is why starting early matters so much.
Should the employer contribution be counted?
Yes, once vested. Employer money reduces what you must save, but do not count amounts you might forfeit by leaving before vesting.