A 401(k) plan is a powerful employer-sponsored retirement savings tool. It allows employees to save and invest a portion of their paycheck before taxes are taken out. Many employers also offer a matching contribution, which is essentially free money towards your retirement goals. This calculator helps you project the potential growth of your 401(k) savings based on your current balance, contributions, salary, employer match, and an assumed rate of return.
How the Calculation Works:
The projection is based on a year-by-year compounding growth model. Here's a breakdown of the steps involved:
Years to Retirement: This is the difference between your desired retirement age and your current age.
Total Annual Contribution: This includes your own annual contributions plus the employer's matching contribution. The employer match is calculated as a percentage of your current annual salary.
Yearly Growth: Each year, the current balance grows by the assumed annual return rate.
Contributions Added: After the growth is calculated, the total annual contribution (your contribution + employer match) is added to the balance.
Compounding: This process repeats for each year until the desired retirement age is reached.
The formula for each year's projection is essentially:
New Balance = (Current Balance * (1 + Annual Return Rate / 100)) + Total Annual Contribution
Key Inputs Explained:
Current Age & Desired Retirement Age: Determine the number of years you have to save and invest. The longer you have, the more impact compounding can have.
Current 401(k) Balance: Your starting point. A larger initial balance provides a significant head start.
Annual Contribution: The amount you contribute from your salary each year. Increasing this can significantly boost your future balance. Consider contributing at least enough to get the full employer match.
Current Annual Salary: Used to calculate the dollar amount of the employer match.
Employer Match (% of Salary): A crucial component. Ensure you understand your employer's matching formula and contribute enough to maximize it.
Assumed Annual Return Rate: This is an estimate of how much your investments might grow each year, on average. This is a critical variable; historical averages for stock market investments are often cited around 7-10%, but actual returns vary greatly and involve risk. A conservative estimate is generally recommended.
Important Considerations:
This calculator provides a projection, not a guarantee. Actual investment returns can fluctuate significantly.
Inflation is not factored into this basic calculator. The future purchasing power of your projected savings will be less than it is today.
Taxes on withdrawals in retirement are not included.
This calculator does not account for potential changes in salary, contribution rates, employer match policies, or investment performance over time.
It's always advisable to consult with a qualified financial advisor for personalized retirement planning.
function calculateRetirementProjection() {
var currentAge = parseFloat(document.getElementById("currentAge").value);
var retirementAge = parseFloat(document.getElementById("retirementAge").value);
var currentSavings = parseFloat(document.getElementById("currentSavings").value);
var annualContribution = parseFloat(document.getElementById("annualContribution").value);
var annualSalary = parseFloat(document.getElementById("annualSalary").value);
var employerMatchPercentage = parseFloat(document.getElementById("employerMatchPercentage").value);
var annualReturnRate = parseFloat(document.getElementById("annualReturnRate").value);
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = "; // Clear previous results
// Input validation
if (isNaN(currentAge) || currentAge < 0 ||
isNaN(retirementAge) || retirementAge < 0 ||
isNaN(currentSavings) || currentSavings < 0 ||
isNaN(annualContribution) || annualContribution < 0 ||
isNaN(annualSalary) || annualSalary < 0 ||
isNaN(employerMatchPercentage) || employerMatchPercentage 100 ||
isNaN(annualReturnRate) || annualReturnRate < 0) {
resultDiv.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
if (retirementAge <= currentAge) {
resultDiv.innerHTML = "Retirement age must be greater than current age.";
return;
}
var yearsToRetirement = retirementAge – currentAge;
var employerMatchAmount = (annualSalary * employerMatchPercentage) / 100;
var totalAnnualContribution = annualContribution + employerMatchAmount;
var projectedBalance = currentSavings;
for (var i = 0; i < yearsToRetirement; i++) {
// Calculate growth for the year
projectedBalance = projectedBalance * (1 + annualReturnRate / 100);
// Add contributions for the year
projectedBalance = projectedBalance + totalAnnualContribution;
}
// Format the result to two decimal places for currency
var formattedBalance = projectedBalance.toLocaleString(undefined, {
minimumFractionDigits: 2,
maximumFractionDigits: 2
});
resultDiv.innerHTML = "Projected 401(k) Balance at Retirement:$" + formattedBalance + "";
}
function resetForm() {
document.getElementById("currentAge").value = "30";
document.getElementById("retirementAge").value = "65";
document.getElementById("currentSavings").value = "50000";
document.getElementById("annualContribution").value = "10000";
document.getElementById("annualSalary").value = "70000";
document.getElementById("employerMatchPercentage").value = "5";
document.getElementById("annualReturnRate").value = "7";
document.getElementById("result").innerHTML = ";
}