401(k) Calculator

401(k) Calculator – Plan Your Retirement Savings

Our 401(k) Calculator projects your retirement savings by combining your contributions, employer matching, and investment growth over time. A 401(k) is a tax-advantaged retirement savings plan offered by employers in the United States, named after Section 401(k) of the Internal Revenue Code. It's one of the most powerful wealth-building tools available to American workers, with over 60 million active participants and $7.7 trillion in assets.

How a 401(k) Works

A 401(k) allows employees to contribute a portion of their pre-tax salary directly into a retirement investment account. Contributions reduce your taxable income for the year, providing an immediate tax benefit. The money grows tax-deferred, meaning you don't pay taxes on investment gains, dividends, or interest until you withdraw the funds in retirement. Many employers offer matching contributions — essentially free money — up to a certain percentage of your salary. For 2024, the employee contribution limit is $23,000 ($30,500 for those 50 and older with catch-up contributions).

The Employer Match: Free Money You Shouldn't Leave Behind

The employer match is one of the most valuable benefits of a 401(k). A common match formula is 50% of employee contributions up to 6% of salary. This means if you earn $75,000 and contribute 6% ($4,500), your employer adds $2,250 — a 50% instant return on your contribution. Not contributing enough to get the full match is literally leaving money on the table. Financial advisors unanimously agree: always contribute at least enough to maximize your employer match before directing money to any other investment. Vesting schedules determine when you fully own employer contributions — typically 3-6 years.

Traditional vs Roth 401(k)

Many employers now offer both traditional and Roth 401(k) options. Traditional 401(k) contributions are pre-tax (reducing current taxable income) with withdrawals taxed in retirement. Roth 401(k) contributions are after-tax (no current tax break) but withdrawals in retirement are completely tax-free, including all investment gains. The choice depends on whether you expect your tax rate to be higher now or in retirement. Young workers in lower tax brackets often benefit from Roth, while high earners may prefer traditional. A split approach hedges your bet against future tax uncertainty.

Investment Options in Your 401(k)

Most 401(k) plans offer a menu of investment options including stock index funds, bond funds, target-date funds, international funds, and sometimes company stock. Target-date funds are popular for their simplicity — they automatically adjust the asset allocation as you approach retirement, shifting from stocks to bonds. For those who prefer hands-on management, a diversified allocation across US stocks (50-70%), international stocks (15-25%), and bonds (10-25%) is a common framework, adjusted based on your age and risk tolerance. Minimize fees by choosing index funds over actively managed funds when possible — even a 0.5% difference in fees can cost you hundreds of thousands over a career.

Common 401(k) Mistakes to Avoid

Not enrolling or delaying enrollment is the biggest mistake — every year of delay costs tens of thousands in retirement wealth. Not contributing enough to get the full employer match leaves free money unclaimed. Taking early withdrawals incurs a 10% penalty plus income tax, devastating your retirement savings. Being too conservative (all bonds) or too aggressive (all stocks) for your age. Not increasing contributions when you get raises. Over-concentrating in company stock creates dangerous single-stock risk. Not rolling over 401(k) accounts when changing jobs, leaving money in poorly-performing or high-fee plans. Ignoring your 401(k) entirely — review and rebalance at least annually.