401(k) Retirement Calculator
Calculate your 401(k) growth with employer matching, tax advantages, and compound returns. See exactly how much you'll have at retirement and plan your financial future.
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401(k) Retirement Calculator
Calculate your 401(k) growth with employer matching and tax advantages
Understanding Your 401(k)
What is a 401(k)?
A 401(k) is an employer-sponsored retirement savings plan that offers significant tax advantages. Contributions are made pre-tax (reducing your taxable income now), and investments grow tax-deferred until withdrawal in retirement.
Why Employer Match is "Free Money"
Many employers match your contributions up to a certain percentage. For example, a 50% match on contributions up to 6% of salary means if you contribute 6%, your employer adds another 3%. Never leave employer match on the table - it's an instant guaranteed return!
Contribution Limits (2026)
- Under 50: $23,000 per year
- Age 50+: $30,500 per year (with $7,500 catch-up)
- Total limit: $69,000 (including employer match)
Investment Options
Most 401(k) plans offer target-date funds, index funds, and actively managed funds. For most people, low-cost target-date funds or S&P 500 index funds are excellent choices with minimal effort required.
Maximizing Your 401(k) for Retirement
Step 1: Get the Full Employer Match
This is the single most important rule of 401(k) investing. Employer matching is literally free money - an instant 25-100% return on your contributions. If your employer offers a match, contribute at least enough to receive it all. For example:
- Company offers: 50% match on contributions up to 6% of salary
- Your salary: $75,000
- You contribute: 6% = $4,500/year
- Company adds: 3% = $2,250/year (free!)
- Total saved: $6,750/year
Step 2: Increase Contributions Over Time
Start where you can and increase gradually. Many plans offer automatic annual increases. A good progression:
- Year 1: 6% (get full match)
- Year 2: 8% (after first raise)
- Year 3: 10% (building momentum)
- Year 5+: 15% (on track for comfortable retirement)
Step 3: Choose Low-Cost Index Funds
Investment selection matters. Here's a simple, proven approach:
- Target-Date Funds: Easiest option - automatically adjusts risk as you age
- S&P 500 Index: Simple, low-cost exposure to US stocks
- Total Market Index: Broader diversification across all US companies
- Three-Fund Portfolio: US stocks (60%), International stocks (30%), Bonds (10%)
401(k) vs IRA: What's the Difference?
| Feature | 401(k) | IRA |
|---|---|---|
| Contribution Limit (2026) | $23,000 ($30,500 age 50+) | $7,000 ($8,000 age 50+) |
| Employer Match | Yes (often 3-6%) | No |
| Investment Options | Limited to plan options | Unlimited |
| Fees | Varies (0.5-2%) | Usually lower (0.03-0.5%) |
| When to Use | First priority (get match!) | After maxing 401(k) match |
Common 401(k) Mistakes to Avoid
- Not contributing enough for full match - Leaving free money on the table
- Cashing out when changing jobs - Lose 30-40% to taxes and penalties
- Being too conservative - Young workers in bonds miss decades of growth
- Ignoring fees - High-fee funds can cost you hundreds of thousands
- Stopping contributions in downturns - Miss buying opportunities
- Not rebalancing - Portfolio drifts away from target allocation
Frequently Asked Questions
How much should I contribute to my 401(k)?â–¼
At minimum, contribute enough to get the full employer match - it's free money! Ideally, aim for 10-15% of your salary. The 2026 IRS limit is $23,000 per year ($30,500 if age 50+).
What is employer matching?â–¼
Employer matching is when your company contributes money to your 401(k) based on your contributions. For example, "50% match up to 6%" means if you contribute 6% of salary, they add 3%. This is an instant 50% return on your money!
What return should I expect from my 401(k)?â–¼
Historical stock market returns average 7-10% annually. Conservative estimates use 6-7%, moderate 7-8%, and aggressive 8-10%. Your actual returns depend on your investment choices and market conditions.
Can I access my 401(k) money before retirement?â–¼
Yes, but with penalties. Withdrawals before age 59½ typically incur a 10% penalty plus income tax. Exceptions exist for hardship withdrawals, loans (if plan allows), and Rule of 55 for those leaving jobs at 55+.
What is the 4% withdrawal rule?â–¼
The 4% rule suggests withdrawing 4% of your retirement savings annually for sustainable income. For a $1 million 401(k), that's $40,000/year. Research shows this provides a 95% probability your money will last 30+ years in retirement.
Should I do Roth 401(k) or Traditional 401(k)?â–¼
Traditional 401(k) contributions are pre-tax (tax deduction now, pay taxes in retirement). Roth 401(k) contributions are after-tax (no deduction now, tax-free withdrawals). Choose Traditional if you expect lower taxes in retirement, Roth if higher. Many do both.
What happens to my 401(k) if I change jobs?â–¼
You have options: (1) Leave it with old employer, (2) Roll over to new employer's plan, (3) Roll over to an IRA, (4) Cash out (not recommended due to taxes and penalties). Rolling over to an IRA often provides the most investment options.
How do 401(k) fees affect my returns?â–¼
Fees matter enormously! A 1% fee difference can cost hundreds of thousands over a career. Look for low-cost index funds with expense ratios under 0.20%. Avoid funds with loads or 12b-1 fees.