401k Contribution Calculator
Calculate your retirement savings and maximize your employer match.
Understanding Your 401k Contributions
A 401k is one of the most powerful tools available for retirement planning in the United States. By contributing a portion of your pre-tax salary, you reduce your taxable income today while building a nest egg for the future. This calculator helps you visualize how much you are contributing and how that money grows over time with compound interest.
How the Employer Match Works
Many employers offer a "matching contribution" as an incentive. For example, if your employer offers a 50% match up to 6% of your salary, they will add $0.50 for every dollar you contribute, until your contribution reaches 6% of your gross pay. This is essentially a 100% guaranteed return on your money—always aim to contribute at least enough to get the full match.
The Power of Compounding
The secret to a large 401k balance isn't just high contributions; it's time. Compound interest allows your earnings to generate their own earnings. Starting just five years earlier can result in hundreds of thousands of dollars more at retirement age. This calculator assumes an annual rate of return (historically 7-10% for the S&P 500) to project your future wealth.
2024 and 2025 Contribution Limits
For 2024, the IRS individual contribution limit is $23,000. For those aged 50 and over, a "catch-up" contribution of an additional $7,500 is permitted, totaling $30,500. In 2025, these limits typically adjust for inflation. Ensure your total contributions do not exceed these legal thresholds to avoid tax penalties.
Example Calculation
- Salary: $80,000
- Your Contribution: 10% ($8,000/year)
- Employer Match: 50% up to 6%
- Employer Adds: $2,400/year (which is 50% of the first $4,800 you put in)
- Total Annual Savings: $10,400