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| Year | Salary | Contrib | Balance |
|---|---|---|---|
| Year '+i+' | $'+Math.round(sal).toLocaleString()+' | $'+Math.round(annualContrib+annualMatch).toLocaleString()+' | $'+Math.round(currentBal).toLocaleString()+' |
Total Employer Match: $'+Math.round(totalMatch).toLocaleString()+'
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Calculator Use
Planning for your future is one of the most important financial steps you can take. Use this 401k calculator to estimate how much your retirement nest egg will grow over time. By adjusting variables like your contribution rate, employer match, and expected market returns, you can visualize different scenarios and optimize your savings strategy.
This tool accounts for salary growth and compound interest, providing a realistic projection of your wealth at retirement age.
- Current Age & Retirement Age
- The number of years between these two points determines the time horizon for compound interest to work its magic.
- Contribution Rate
- The percentage of your gross annual salary you plan to defer into your 401k account.
- Employer Match
- Many employers match a portion of your contributions (e.g., 50% of the first 6% you contribute). This is essentially "free money" that significantly boosts your balance.
How It Works
The 401k calculator uses the principle of compound interest. Every year, your balance grows through your contributions, your employer's contributions, and investment returns. In the following year, you earn returns on that new, larger balance. The formula for annual growth is:
Ending Balance = Beginning Balance × (1 + Return Rate) + Annual Contributions
- Beginning Balance: Your starting point for the year, which includes all previous growth.
- Return Rate: The average annual percentage your investments gain. Historical stock market averages are often around 7-10%.
- Annual Contributions: The sum of your personal deferrals and the employer match.
Calculation Example
Example: A 30-year-old professional currently earns $60,000 per year and has $25,000 already saved in their 401k. They contribute 6% of their salary, and their employer matches 50% of that (3%). They expect a 2% annual raise and a 7% annual investment return.
Step-by-step projection for Year 1:
- Your Contribution: $60,000 × 0.06 = $3,600
- Employer Match: $60,000 × 0.03 = $1,800
- Interest Earned: $25,000 × 0.07 = $1,750
- Year 1 Ending Balance: $25,000 + $3,600 + $1,800 + $1,750 = $32,150
- New Salary for Year 2: $60,000 × 1.02 = $61,200
Common Questions
What is the 401k contribution limit for 2024?
For 2024, the individual contribution limit is $23,000. If you are age 50 or older, you can make an additional "catch-up" contribution of $7,500, bringing your total possible contribution to $30,500. This 401k calculator helps you see how reaching these limits affects your long-term wealth.
How much should I contribute to my 401k?
Financial experts generally recommend contributing at least enough to get the full employer match, as this is a 100% return on your money immediately. Beyond that, aiming for 15% of your gross income (including employer contributions) is a common benchmark for a comfortable retirement.
Does the calculator account for taxes?
Traditional 401k contributions are made pre-tax, meaning you pay taxes when you withdraw the money in retirement. This calculator shows the gross balance. To estimate your "spendable" money, you should factor in your expected tax bracket during retirement.