401(k) Retirement Calculator
How It Works
A 401(k) is an employer-sponsored retirement savings account that allows you to invest a portion of your paycheck before taxes are taken out. Your contributions grow tax-deferred — meaning you pay no income tax on the money until you withdraw it in retirement. This tax advantage, combined with the power of compound interest, makes a 401(k) one of the most effective wealth-building tools available to working Americans.
One of the most powerful features of a 401(k) is the employer match. Many companies will match a percentage of what you contribute, up to a certain portion of your salary. For example, a "50% match up to 6% of salary" means if you earn $75,000 and contribute 6% ($4,500), your employer adds another 50% of that ($2,250) — effectively giving you a 50% instant return on that money before it even invests. Financial advisors often call this "free money," and failing to contribute enough to capture the full match is one of the most common and costly retirement mistakes people make.
The 2026 IRS 401(k) contribution limits are $24,500 per year for employees under age 50. If you are 50 or older, you can make an additional "catch-up" contribution of $8,000, bringing your total allowable contribution to $32,500. These limits are adjusted periodically by the IRS to account for inflation, so it's worth checking each year.
The mathematics of compound interest are what make early contributions so powerful. When your money earns returns, those returns themselves start earning returns. Over a 35-year career, this compounding effect means that a dollar invested at age 30 can grow to many times its original value by retirement. The difference between starting to save at 25 versus 35 can easily amount to hundreds of thousands of dollars at retirement — even if both investors contribute identical amounts per month for their respective savings periods.
Our calculator uses a year-by-year simulation that applies your annual contributions and employer match at the start of each year, then grows the total at your expected annual return. The 7% default return used in many retirement calculators represents a historically reasonable after-inflation estimate for a diversified stock portfolio, though actual results will vary based on your specific investment choices and market conditions.
Understanding the breakdown between your personal contributions, your employer's contributions, and the investment growth those funds have generated is key to appreciating how much the market is working for you over time. In the early years, most of your balance is contributions. By retirement, the majority of a large balance is typically growth — money you never had to earn yourself.
Formula Breakdown
The 401(k) projection uses a year-by-year compound growth formula: Year-End Balance = (Previous Balance + Annual Contribution + Employer Match) × (1 + Annual Return) Where: - Annual Contribution = min(Salary × Contribution Rate, $24,500 IRS limit) - Employer Match = min(Annual Contribution, Salary × Match Ceiling %) × Match Percent % - Annual Return = Expected return rate (e.g., 7% = 0.07) Example with default values ($75,000 salary, 10% contribution, 50% match up to 6%, 7% return): - Annual Contribution: min($7,500, $24,500) = $7,500 - Match Ceiling: $75,000 × 6% = $4,500 - Employer Match: min($7,500, $4,500) × 50% = $4,500 × 50% = $2,250 - Year 1 End Balance: ($0 + $7,500 + $2,250) × 1.07 = $10,425 × 1.07 = $11,154.75 This is repeated for each year from your current age to retirement age. The compounding effect means that the same $9,750/year in contributions grows dramatically as the existing balance generates its own returns year after year.
Related Calculators
Traditional vs Roth IRA Calculator
Compare Traditional and Roth IRA growth side-by-side. See year-by-year projections for both strategies and discover which account type produces more after-tax retirement wealth based on your current and future tax rates.
Compound Interest Calculator
Calculate compound interest with monthly contributions. See your final balance, total contributions, and interest earned with an interactive growth chart. Free compound interest calculator.
Income Tax Estimator
Estimate your 2026 federal income tax based on your gross income and filing status. See your effective tax rate, marginal tax rate, and bracket-by-bracket breakdown.
Debt Payoff vs Investing Calculator
Should you pay off debt or invest extra money? Compare net worth outcomes for both strategies. See exactly how much extra cash at the end of 30 years from paying off debt first versus investing the difference.