What is 401K Calculator?
A 401(k) calculator projects the growth of your pre-tax retirement savings plan, factoring in your deferral rate, employer match matching incentives, wage inflation, and compounding capital returns.
How to Use This Calculator
- Enter current annual salary.
- Specify the percentage you contribute each pay period.
- Enter your company’s employer matching formula (e.g. 50% match up to 6% of salary).
- Set years until retirement to view your balance breakdown.
The Mathematical Formula & Variables
Total Contribution = Employee Contribution + Employer Match; Compounded annually.
Variables Definition
| Symbol / Variable | Name | Description |
|---|---|---|
Match\% |
Employer Match | Min(Your Contribution, Match Limit) * Match Rate. |
Step-by-Step Worked Example
Scenario: $85,000 salary, contributing 8% ($6,800/yr) with 50% match up to 6% ($2,550/yr) over 30 years at 7.5% return.
- Year 1 employee contribution = $6,800.
- Year 1 employer match = 50% of 6% = 3% of $85,000 = $2,550.
- Total Year 1 savings = $9,350.
- Compounded over 30 years with 2.5% salary growth and 7.5% market returns yields $1,894,320.
Result: Total 401(k) value reaches $1,894,320, of which $234,000 is 100% free employer matching money.
Frequently Asked Questions
What is an employer 401(k) match?
An employer match is money your employer contributes to your retirement account based on your own contributions. It represents an immediate 50% to 100% risk-free return on your savings.
What is the IRS annual 401(k) contribution limit?
For 2024–2026, the IRS employee deferral limit is $23,000 (with an additional $7,500 catch-up contribution for individuals aged 50 and older).