How to Use the 401(k) Calculator
This 401(k) calculator projects the future value of your employer-sponsored retirement plan based on your contributions, employer match, expected returns, and time until retirement.
Current Age and Retirement Age — these determine your investment timeline. The more years until retirement, the more time compound growth has to multiply your savings.
Current 401(k) Balance — the amount already in your 401(k) account. This is your starting point for growth projections.
Annual Salary — your current gross salary. Your contributions are calculated as a percentage of this amount.
Contribution Percentage — the percentage of your salary you contribute to your 401(k) each year. In 2025, you can contribute up to $23,500 per year ($31,000 if you are 50 or older with catch-up contributions).
Employer Match — many employers match a portion of your contributions. A common match is 50% of your contributions up to 6% of your salary. This is essentially free money — always contribute enough to capture the full match.
Expected Return — the average annual return on your 401(k) investments. A diversified mix of stock and bond index funds typically targets 6-8% long-term returns.
The Power of Employer Matching
An employer match is the single best return on investment available anywhere. If your employer matches 50 cents for every dollar you contribute up to 6% of your salary, that is an instant 50% return on your money before any market gains.
Here is how employer matching works on a $75,000 salary with a 50% match up to 6%:
| Your Contribution | % of Salary | Annual Amount | Employer Match | Total Annual |
|---|---|---|---|---|
| 3% | Below match limit | $2,250 | $1,125 | $3,375 |
| 6% | At match limit | $4,500 | $2,250 | $6,750 |
| 10% | Above match limit | $7,500 | $2,250 | $9,750 |
| 15% | Well above limit | $11,250 | $2,250 | $13,500 |
Notice that the employer match maxes out at 6% of salary ($2,250 in this example). Contributing beyond the match limit still makes sense for the tax benefits and compound growth, but the match stops increasing. At minimum, always contribute enough to capture 100% of your employer match.
401(k) Contribution Limits and Tax Benefits
A 401(k) offers significant tax advantages that accelerate your savings growth:
- Traditional 401(k) — contributions are made with pre-tax dollars, reducing your taxable income today. You pay taxes when you withdraw funds in retirement, ideally at a lower tax bracket.
- Roth 401(k) — contributions are made with after-tax dollars, but qualified withdrawals in retirement are completely tax-free, including all investment gains.
For 2025, the IRS contribution limits are:
- Under 50: $23,500 per year in employee contributions
- 50 and older: $31,000 per year (includes $7,500 catch-up contribution)
- Total limit (employee + employer): $70,000 per year
Even if you cannot max out your contributions, increasing your contribution rate by just 1% of salary each year can add hundreds of thousands of dollars to your retirement balance over a full career.