401(k) Calculator
Calculate your retirement savings with employer matching contributions.
Your Information
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Retirement Projection
Age 47
Age 65
Understanding Employer Match
An employer match is essentially “free money” added to your retirement savings. Common match formulas include:
50% match up to 6% of salary
Dollar-for-dollar up to 4% of salary
Example: With a $75,000 salary and “50% match up to 6%”, if you contribute 6% ($4,500), your employer adds 50% of that ($2,250) – that’s $2,250 in free money!
2024-2025 Contribution Limits
Catch-up contributions are available for those aged 50 and older, allowing extra savings as retirement approaches.
Maximize Your 401(k)
- Always get the full match: Not contributing enough to get the full match is leaving free money on the table.
- Increase contributions over time: Bump up your rate by 1% each year or with each raise.
- Choose low-cost index funds: Expense ratios matter significantly over decades.
- Consider Roth 401(k): If available, Roth contributions grow tax-free (you pay taxes now instead of retirement).
- Don’t cash out when changing jobs: Roll over to new employer’s plan or an IRA to avoid taxes and penalties.
Traditional vs Roth 401(k)
- Traditional 401(k): Contributions reduce taxable income now; you pay taxes when you withdraw in retirement.
- Roth 401(k): Contributions are after-tax; withdrawals in retirement are tax-free.
- Best for Traditional: If you expect lower tax rates in retirement or need current tax deduction.
- Best for Roth: If you expect higher taxes in retirement or want tax-free income later.
- Hedge your bets: Many people split contributions between both types for tax diversification.
Important Considerations
- Vesting schedules: Employer contributions may vest over 3-6 years. Leaving early could mean forfeiting unvested match.
- Early withdrawal penalties: Withdrawing before 59½ typically incurs 10% penalty plus income taxes.
- Required Minimum Distributions: You must start withdrawing at age 73 (Traditional 401k only).
- Investment options: 401(k) plans have limited fund choices compared to IRAs.
- Fees matter: Check your plan’s expense ratios and administrative fees – they compound over time.
Frequently Asked Questions
How does employer 401(k) matching work in this calculator?
You enter the employer match rate (e.g., 50%) and the match limit as a percentage of salary (e.g., up to 6%). If your salary is $80,000 and you contribute 6%, your contribution is $4,800 and your employer adds $2,400 — the calculator compounds both amounts over the full investment period.
What is the 2025 IRS 401(k) contribution limit?
For 2025, the IRS elective deferral limit is $23,500 per year ($31,000 if you are age 50 or older and eligible for the $7,500 catch-up contribution). The calculator helps you see whether your chosen contribution percentage stays below this cap as your salary grows.
Why does a higher salary growth rate make such a big difference?
Salary growth raises your base each year, which automatically increases both your dollar contribution and your employer match. Over a 30-year career, even a 2% annual raise roughly doubles your final contribution rate in dollar terms, significantly compounding the final portfolio balance.
Does this calculator account for 401(k) contribution limits?
The calculator models percentage-based contributions and employer matching but does not automatically cap contributions at the IRS annual limit. If your salary is high enough that your chosen percentage exceeds the limit, you should manually check the IRS cap for accuracy.
What return rate should I use for my 401(k) projection?
A common assumption is 6–8% annually, reflecting a diversified stock-and-bond portfolio after inflation adjustment, or roughly 10% before inflation for a mostly-equity mix. The calculator lets you test different rates; results can vary dramatically between 5% and 9% over 30 years, so running multiple scenarios is advisable.