401(k) Calculator

How the 401(k) projection works

A 401(k) is the retirement plan offered by most private-sector employers. Money comes out of each paycheck before tax, your employer often adds a matching contribution, and everything grows tax-deferred until you withdraw it in retirement. This calculator combines those three engines. Your current balance compounds for the full period. Separately, each year's combined contribution, yours plus your employer's, is treated as a deposit that compounds for the years remaining. Add the grown-up deposits to the grown-up starting balance and you get the projected figure at the top, split into what you put in, what your employer put in, and what growth added on top.

The math behind each piece is the standard future-value calculation. A lump sum grows as balance × (1 + return) raised to the number of years. A steady yearly deposit grows as deposit × [((1 + return)^years − 1) ÷ return]. The split matters more than the total: over a typical 25-year projection, investment growth usually ends up larger than all contributions combined, which is why starting early beats saving more later. The employer match deserves special attention. It is an immediate 100% return on that slice of your pay before any market growth, so contributing at least enough to capture the full match is the closest thing retirement saving has to a guaranteed win.

Practical tips for 401(k) savers

First, never leave match money unclaimed: if your employer matches up to 4% and you contribute 3%, raising your contribution to 4% is effectively a pay rise. Second, use automatic escalation if your plan offers it; a 1% rise each year is barely felt in your paycheck but compounds into serious money. Third, check the expense ratios of the funds inside your plan, because a fund charging 1% a year can consume a quarter of your final balance over a career compared with one charging 0.1%. Finally, this projection holds salary and contribution percentages constant, so if your pay rises and you contribute a percentage of it, treat the result as a floor based on today's pay rather than a ceiling.