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Compound Interest Calculator

See how a lump sum and regular contributions grow with compounding, or how a retirement portfolio holds up while you draw an income from it.

How to Use the Calculator

What the calculator does

It grows a starting balance month by month at a steady rate, adds (or takes out) a monthly amount, and shows the balance at the end of each year. Compounding means each year's growth is earned on the previous years' growth as well as on the money you put in, so a balance grows faster the longer it is left alone.

In numbers: $10,000 at 7% for 30 years becomes $76,123 with annual compounding and nothing added. Simple interest on the same sum would pay $21,000, for a total of $31,000.

It opens on a hypothetical 60-year-old with $800,000 in a 401(k) and IRA, adding $2,500 a month until retiring at 67, at a steady 6%. The Example tab walks through that case; replace the figures with your own.

The eighth wonder of the world? The line is often attributed to Einstein, but there is no record that he said it. The arithmetic needs no endorsement: growth builds on growth, so the last decade adds more than the first.

The inputs

Initial investment

The balance you start from: usually today's value of the 401(k), IRA or brokerage account you are projecting, or all of them together.

Annual interest rate

The average yearly return you expect, before inflation. Use a rate that fits what you hold: a balanced stock-and-bond mix earns less on average than an all-stock one. Test 5%, 6% and 7% rather than trusting one number.

Investment period

Years until the money is needed. Before retirement, that is the years left to your retirement date. For a portfolio you will live on, 25 to 30 years is realistic, because it has to last for the longer-lived spouse.

Compounding frequency

How often growth is credited. It matters less than people expect: monthly and daily differ by a fraction of a percent over decades.

Monthly contribution

What you add each month from salary, catch-up contributions and any employer match. In the 2026 tax year a worker aged 50 or over can defer up to $32,500 into a 401(k), and $35,750 at ages 60 to 63.

Withdrawals in retirement

Enter a negative monthly contribution to model income taken from a portfolio, and use the annual increase field to raise withdrawals with inflation. Total contributions then shows net withdrawals as a negative figure.

Where the growth is taxed

The calculator shows growth before tax. What you keep depends on the account the money compounds in.

Traditional 401(k) and IRA

Grows untaxed, but every dollar withdrawn is ordinary income, and required minimum distributions begin at 73, or 75 if you were born in 1960 or later.

Roth IRA and Roth 401(k)

Qualified withdrawals are tax-free and the original owner has no required distributions, which lets a Roth compound the longest of any account.

Taxable brokerage

Dividends and realized gains are taxed each year, which slows compounding slightly. Assets held until death generally receive a stepped-up basis for heirs.

Mistakes That Cost the Most at This Stage

  • Paying a percentage fee without pricing it: on a large balance, 1% a year compounds into six figures; the Impact of Fees table shows the amount for your inputs.
  • Leaving a lump sum in cash for years: waiting for a better entry point usually costs more than a decline would; see the Cost of Holding Off table.
  • Treating a smooth return as a forecast: once withdrawals start, a bad first few years does lasting damage; test a lower rate.
  • Forgetting the tax on traditional balances: a $1 million traditional IRA is not $1 million to spend; part of it belongs to the IRS.
  • Taking too much too early: a withdrawal well above the portfolio’s real return shrinks the balance that is meant to compound for decades.

A Sensible Order of Work

  1. 1Enter your current balance, the years to retirement and what you still add each month
  2. 2Run it at 5%, 6% and 7% to see the range rather than a single answer
  3. 3Check the Impact of Fees table against what your funds and any adviser actually charge
  4. 4Switch the monthly amount to a negative withdrawal, raised 3% a year, to test the retirement years
  5. 5Compare the result with the Retirement Withdrawal Calculator, which tests uneven returns
  6. 6Review once a year with your year-end balances

Learn more: Read our comprehensive guide on

Compound Interest After 60: Growth, Fees and Drawdown

How compounding works before and during retirement: the Rule of 72, fees, inflation, sequence risk and gifts to grandchildren.

What Do the Last Years Before Retirement Add?

More than most people expect, and mostly through growth on the balance already built rather than through new savings. The calculator opens on a hypothetical 60-year-old with $800,000 in a 401(k) and IRA who adds $2,500 a month until 67. At a steady 6% the portfolio reaches about $1,476,000 by 67. Only $210,000 of the increase is new money; $466,000 is growth, and $416,000 of that growth comes from the $800,000 she started with.

That has two consequences. First, the return and the cost of earning it matter more than the contribution. One percentage point of return, or a 1% annual fee, moves the result at 67 by about $90,000, three years' worth of contributions. Second, each extra working year adds more than the one before: working to 69 on the same terms lifts the balance to about $1,728,000, a gain of roughly $250,000 for two more years, of which only $60,000 is contributions.

Catch-up contributions still help. In 2026 a worker aged 50 or over can defer up to $32,500 into a 401(k), and $35,750 in the years they are 60 to 63, before any employer match. The guide to maximizing a 401(k) covers the rules, including the requirement that higher earners make catch-ups as Roth contributions. Whether the extra years are worth working is a separate question; how much you need to retire works through it from the spending side.

Which Account Should Do the Compounding?

The one whose growth is taxed least by the time it is spent, which for many retirees is the Roth. The calculator shows growth before tax, but the same balance is worth different amounts in different accounts.

  • Traditional 401(k) and IRA: growth is untaxed until withdrawn, then taxed as ordinary income. Required minimum distributions start at 73, or 75 if you were born in 1960 or later, and force part of the balance out each year whether you need it or not.
  • Roth IRA and Roth 401(k): qualified withdrawals are tax-free, and the original owner has no required distributions, so a Roth can compound untouched for life and pass to heirs.
  • Taxable brokerage: interest, dividends and realized gains are taxed along the way, which trims the compounding rate. Unrealized gains held until death generally receive a stepped-up basis, so heirs may owe little on them.

That is why the order of withdrawals matters. Spending from taxable accounts first and converting some traditional money to Roth in lower-income years can leave more of the portfolio compounding tax-free for longer. Roth conversions before RMDs explains the trade-off, and the RMD Calculator shows how much a traditional balance will be required to pay out each year.

Does Compounding Still Matter After You Retire?

Yes, and for longer than most people expect. A couple retiring at 66 has a reasonable chance that one of them lives into their nineties, so much of the portfolio they hold on retirement day will stay invested for ten, twenty or thirty more years. The dollars spent in year 25 are compounding the whole time until then.

What changes is the direction of the cash flow. During a career, contributions add to the balance and a bad year is a chance to buy at lower prices. In retirement, withdrawals subtract from it, and a bad year early on forces sales at low prices. The formula is the same; the sensitivity is different.

The calculator handles both. To model a retirement, enter the portfolio as the initial investment, enter the monthly withdrawal as a negative monthly contribution, and use the annual contribution increase to raise the withdrawal with inflation. The Example tab walks through a couple with $1.5 million drawing 4%.

How Much Can You Withdraw and Keep Compounding?

Roughly the portfolio's return minus inflation, if you want the balance to hold its real value. At a 6% return and 3% inflation, a first-year withdrawal of about 3% of the portfolio, raised each year with prices, leaves the real balance close to intact. A 4% withdrawal draws on principal slowly; at a steady 6% it still leaves more money than the couple started with after 30 years, in nominal dollars.

Hypothetical retirees Robert and Ellen, 66, start with $1,500,000 and take $5,000 a month, rising 3% a year. With steady returns:

  • 7% a year: about $3.84 million at 96.
  • 6% a year: about $2.03 million at 96, after peaking near $2.08 million around 91.
  • 5% a year: about $780,000 at 96, with the balance falling from the mid-seventies on.

By year 30 their withdrawal has grown to about $11,800 a month. The gap between the 5% and 6% results, more than $1.2 million, is what a 1% annual advisory or fund fee would cost them if it reduced a 6% return to 5%. Fees compound against you just as returns compound for you, and in retirement there are no new contributions to cover them.

Smooth returns flatter the result. Real returns vary, and the order matters once you withdraw: a large decline in the first two years of retirement leaves a permanently smaller base, while the same decline at 85 does far less harm. The Retirement Withdrawal Calculator tests withdrawal rates against a wider range of outcomes, and retirement withdrawal order covers which accounts to draw from first so more of the portfolio keeps compounding tax-deferred or tax-free.

What Does an Early Gift to a Grandchild Grow To?

About three times its size by college age at 6%, and more than ten times by middle age. A gift of $19,000, the 2026 annual gift-tax exclusion per recipient, invested at a grandchild's birth grows to about $55,800 after 18 years at 6% and about $66,700 at 7%. Left for 40 years at 6%, it reaches about $208,000.

Time does more of the work than the amount. The same gift made when the grandchild is 10 has only 8 years to compound before college and grows to about $30,700 at 6%. For grandparents who want to help, giving earlier is usually worth more than giving more later.

Where the gift is held affects what the grandchild keeps. Growth in a 529 plan is free of federal income tax when spent on qualified education, and a grandparent can elect to spread a larger 529 gift over five years of annual exclusions. The College Savings Calculator covers grandparent-owned 529 plans, and gifting to children and grandchildren covers the broader rules.

How this calculator works

Method and assumptions

  • The balance is simulated month by month. Each month it grows by (1 + r/n)^(n/12), where r is your annual rate and n the compounding frequency you pick, and then the monthly contribution is added at the end of the month.
  • With nothing added, that matches the textbook formula A = P(1 + r/n)^(nt). Choosing annual compounding credits the same yearly total, spread evenly across the months.
  • The monthly contribution rises by your annual increase at the start of each new year. A negative contribution models a withdrawal, and the increase then raises it with inflation. A withdrawal never takes more than the balance: if the money runs out, the calculator says in which year and holds the balance at $0.
  • The rate is fixed for every year. "Effective Annual Rate" is that rate after compounding, (1 + r/n)^n − 1: 6% compounded monthly credits 6.17% a year.
  • The Cost of Holding Off table reruns the same simulation with fewer years, treating the waiting money as earning nothing. The Impact of Fees table subtracts each fee from the rate before compounding.

What it leaves out

  • Returns are a smooth average. Real markets vary, and once you withdraw, a bad first few years does more damage than the same loss later (sequence risk).
  • All figures are before tax and in nominal dollars. Income tax on withdrawals from traditional accounts, tax on dividends in a taxable account, and inflation are not deducted.
  • Required minimum distributions, Social Security and contribution limits are not applied to the numbers you enter.
  • Fund expenses and advisory fees are only modeled in the Impact of Fees table; the headline figure assumes no fees.

Methodology reviewed · For education, not individual advice

Frequently Asked Questions

What is compound interest and how does it work?

Compound interest is growth earned on earlier growth as well as on the money you put in.

Simple interest: $10,000 at 7% for 30 years = $31,000.
Compound interest: $10,000 at 7% for 30 years = $76,123.

The formula is A = P(1 + r/n)^(nt), where P = principal, r = annual rate, n = compounding periods a year and t = years. The longer money is left alone, the larger the share of the ending balance that is growth rather than deposits, which is why a retirement portfolio that must last 25 or 30 years keeps compounding long after the paychecks stop.

How often should interest compound (daily, monthly, annually)?

More frequent compounding pays slightly more, but the difference is small. $10,000 at 7% for 30 years: annually = $76,123, monthly = $81,165, daily = $81,406. Going from monthly to daily adds only 0.3%.

Savings accounts and money market funds usually credit interest daily or monthly; stock and bond funds grow unevenly rather than on a schedule. For a portfolio, the rate of return, the fees and the length of time matter far more than the compounding frequency.

What annual return should I assume?

Use a rate that fits what you hold, and test a range rather than one number. For a balanced stock-and-bond portfolio, running the calculator at 5%, 6% and 7% before inflation shows a reasonable spread; a portfolio mostly in bonds and cash should be tested lower.

The rate makes a large difference over a retirement: $1 million left for 25 years grows to about $3.39 million at 5% and about $5.43 million at 7%, with annual compounding. Fees come straight off the rate: a 1% annual fee on $100,000 at 7% for 30 years costs about $187,000 in ending value.

Should I invest a lump sum at once or spread it out?

Historically, investing a lump sum at once has beaten spreading it out over several months about two-thirds of the time, according to research from Vanguard (Vanguard, 2023), because markets have risen more often than they have fallen and money waiting in cash misses that growth.

Spreading it out still has a place when a large sum arrives at once, such as a 401(k) rollover, an inheritance or the proceeds of a home sale, and a sharp decline soon after investing would lead you to sell. A middle course is to invest half now and the rest over three to six months. What matters more is the long-run mix of stocks, bonds and cash the money ends up in.

Can I still add to retirement accounts in my 60s and 70s?

Yes, as long as you have earned income. In 2026 a worker aged 50 or over can defer up to $32,500 into a 401(k), or $35,750 at ages 60 to 63. The IRA limit is $7,500 plus a $1,100 catch-up at 50 and older, and there is no longer an age limit for traditional IRA contributions, though you need earned income (a spouse's earnings can count).

Enter what you add as the monthly contribution and the years until you stop working as the period. In the calculator's default case, $2,500 a month for 7 years adds $210,000 and grows to about $260,000 by retirement.

Does compound interest still work after I retire and start withdrawing?

Yes. The money you have not yet spent keeps compounding, often for 25 years or more. A couple with $1.5 million who withdraw 4% in the first year and raise it 3% a year for inflation would, at a steady 6% return, still have about $2 million after 30 years; at 5% about $780,000.

Model it in the calculator by entering the withdrawal as a negative monthly contribution and the inflation raise as the annual increase. Real returns arrive unevenly, and a decline early in retirement does more damage than the same decline later, so treat the smooth-return result as a best case and test lower rates.

How much will a gift to a grandchild grow?

A gift of $19,000, the 2026 annual gift-tax exclusion, grows to about $55,800 in 18 years at 6%, or about $66,700 at 7%. Left invested for 40 years at 6%, it would reach about $208,000.

A 529 plan lets the growth be spent free of federal income tax on qualified education. See the College Savings Calculator for grandparent-owned 529 plans and the five-year gift election.

What is the Rule of 72 and how do I use it?

The Rule of 72 is a mental shortcut: years to double = 72 divided by the annual rate.

At 6% money doubles in about 12 years, at 8% in about 9. A $1 million portfolio growing at 6% with nothing withdrawn would be about $2 million in 12 years.

It works for inflation too: at 3% inflation prices double in about 24 years, which is why a withdrawal that looks ample at 65 buys roughly half as much at 89. Reverse it to find a required rate: to double in 10 years you need about 7.2%. The rule is most accurate between 6% and 10%.

What does leaving a lump sum in cash cost?

With the calculator's default inputs ($800,000 plus $2,500 a month at 6% for 7 years), investing five years later leaves about $965,300 instead of $1,476,500, a gap of about $511,200. $150,000 of that is monthly amounts not added; the rest is growth the money never earned.

The calculator treats the waiting money as earning nothing. Held in a money market fund it would earn something, so the real cost is smaller, but the direction holds: money waiting for a better moment usually misses more growth than it avoids. The Cost of Holding Off table runs this on your own numbers.

How much do investment fees really matter?

On the default inputs, a 1% annual fee costs about $91,200 over the 7 years to retirement, about 6.2% of the ending balance, and the cost keeps growing for as long as the money stays invested. Over a 30-year retirement the gap is far larger: for the $1.5 million couple in the Example tab, the difference between a 6% and a 5% return is more than $1.2 million.

Fees come off the return before it compounds, so a fund charging 0.05% and an account charging 1% can end up hundreds of thousands of dollars apart on a seven-figure portfolio. Use the Impact of Fees table to see the gap at your own inputs.

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