Retirement Savings Calculator

How this retirement nest egg is worked out

This calculator starts from an idea often called the safe withdrawal rate, or the "4% rule": if you plan to draw a fixed percentage of an invested pot each year, dividing your required annual spending by that percentage tells you roughly how large the pot needs to be for the drawdown to plausibly last through retirement. At an assumed 4% withdrawal rate, that implies a nest egg of about 25 times one year's retirement spending — the rate itself is an assumption you set, not a rule this calculator asserts as fact.

Retirement is usually decades away, and inflation compounds significantly over that stretch. So the calculator first takes your monthly expenses in today's terms and inflates them forward, at your own assumed inflation rate, to what they'd cost in the year you retire — only then does it annualise that figure and divide by your withdrawal rate. Skipping this step would understate the pot you actually need, since an expense of KES 100,000 today is a materially larger number by the time it's actually spent.

Worked example: the calculator's own defaults

Take the figures the calculator opens with: someone aged 30 retiring at 60 (30 years away), spending KES 100,000 a month today, assuming 7% annual inflation, a 4% withdrawal rate, KES 500,000 already saved, and a 10% assumed annual return. Inflating KES 100,000 by 7% a year for 30 years brings monthly expenses to about KES 761,226 in retirement-year terms. Annualised and divided by the 4% withdrawal rate, that implies a required nest egg of KES 228,367,651.

Left untouched and compounding at the assumed 10% a year for 30 years, the KES 500,000 already saved would grow to only about KES 9,918,700 — leaving a shortfall of roughly KES 218,448,952. Closing that gap with a level monthly contribution, still growing at 10% a year, works out to about KES 96,638 a month.

Why the numbers move so much

That required contribution looks large mainly because a 10% assumed return only modestly outpaces 7% assumed inflation over three decades — a small change to either figure moves the answer substantially, which is exactly why both are inputs you can edit rather than fixed conclusions. The result also stands alone: it doesn't include a statutory NSSF pot (see the NSSF Pension Calculator) or an employer scheme, both of which would reduce the extra amount you personally need to save. Treat this as an illustration of the mechanics, not a retirement plan or investment advice.