How to plan retirement savings

Interest compounds monthly: at the end of each month your contribution is added, then the balance grows by the monthly rate (annual return ÷ 12). The return applies to the whole balance, including the interest earned in earlier months. This compounding is what turns modest savings into a large balance: about two thirds of the balance in the example below comes from the return, not from your contributions.

Enter the expected annual return as a percentage in the return field — for example 6 to mean 6%. The calculator converts it to a monthly rate automatically. A common mistake that inflates the result: entering the monthly rate directly into the annual field. Remember the field is annual; think in terms of a full year.

The calculator assumes a fixed monthly contribution added at the end of each month, and current savings left untouched. If your contributions vary, use a rough average and treat the result as an estimate. Raising your contribution in your early years has a larger compounded effect than raising it later, because the return works on it for longer.

Using the same values as the calculator: current savings of 10,000 dinars, a monthly contribution of 200 dinars, an annual return of 6%, over 20 years. The projected retirement balance is about 125,510 dinars. Your total contributions are about 58,000 dinars (current savings plus contributions), and the interest earned about 67,510 dinars.

Returns are not guaranteed, and the result shifts a lot if the actual return comes in below the expectation. The calculator shows a nominal figure that does not deduct inflation, so the purchasing power at retirement will be lower than shown if inflation persists. For an estimate in today’s purchasing power, subtract your expected inflation rate from the annual return before entering it.

Among the most common: using the monthly rate in the annual return field, forgetting to deduct management fees and taxes from the net return, relying on an unrealistic optimistic return, and ignoring inflation when judging the nominal balance. This is a general planning tool: results are estimates and are not investment advice.