Why use this calculator
A 401(k) is one of the most powerful retirement savings tools available. This calculator projects your balance at retirement and shows the significant impact of employer matching, helping you maximize free money from your employer.
How to use it
Enter your current age, target retirement age, existing balance, annual contribution, employer match details, salary, and expected return rate. The calculator projects your balance with and without employer matching.
The formula
Balance = (Previous Balance + Annual Contribution + Employer Match) x (1 + Return Rate), compounded annually. Employer Match = min(Your Contribution, Salary x Match Limit) x Match Percentage.
Worked examples
Age 30, retire at 65, $30K balance, $6K/yr contribution, 50% match on 6%, 7% return
Approximately $1.1M with match vs $900K without match
Age 25, retire at 60, $0 balance, $10K/yr, 100% match on 4%, 8% return
Starting early with full match maximizes compound growth
When people use it
- Determining how much to contribute to get the full employer match
- Projecting retirement readiness at different ages
- Comparing the impact of increasing contributions by small amounts
- Understanding the power of compound growth over decades
Tips
- Always contribute at least enough to get the full employer match - it is free money
- Increasing contributions by just 1% of salary can add tens of thousands at retirement
- Consider Roth 401(k) contributions for tax-free withdrawals in retirement
- The 2024 contribution limit is $23,000 ($30,500 if age 50+)
Questions people ask
- What is employer matching?
- Many employers match a percentage of your 401(k) contributions. For example, a 50% match on up to 6% of salary means if you contribute 6% of your $75K salary ($4,500), your employer adds $2,250.
- What return rate should I assume?
- Historically, a diversified stock portfolio returns about 10% before inflation, or 7% after inflation. Use 7% for inflation-adjusted projections or 10% for nominal projections.
- Are these projections guaranteed?
- No. Investment returns vary year to year. These projections assume a constant annual return and are meant for planning purposes only.