💼 401(k) Calculator
Project your 401(k) balance at retirement and see how it splits between your own contributions, the employer match and investment growth. It also flags whether you are leaving free money on the table.
The employer match, the tax break, and thirty years of compounding
A 401(k) is the main retirement vehicle for most US employees and it carries two advantages no ordinary account has: contributions reduce taxable income now, and many employers add money on top. The match is the part worth getting right first, because it is the only guaranteed return available anywhere in personal finance.
The match is not a bonus, it is part of your pay
A typical arrangement matches 50 cents per dollar up to 6% of salary. On a $78,000 salary, contributing 6% means putting in $4,680 and receiving $2,340. That is an instant 50% return before the market does anything. Contributing 3% instead gets you only $1,170, leaving $1,170 a year on the table.
| You contribute | Your money | Employer adds | Total into the account |
|---|---|---|---|
| 0% | $0 | $0 | $0 |
| 3% | $2,340 | $1,170 | $3,510 |
| 6% | $4,680 | $2,340 | $7,020 |
| 10% | $7,800 | $2,340 | $10,140 |
| 15% | $11,700 | $2,340 | $14,040 |
Notice that the employer contribution stops rising at 6%. Beyond the match limit you are still saving in a tax-advantaged account, which is worthwhile, but the free money has been fully collected. Capturing the full match is the first priority in almost every order-of-operations guide.
Vesting
Your own contributions are always yours. The employer's may not be yet. Cliff vesting gives you nothing until a set date, commonly three years, then everything at once. Graded vesting releases a percentage each year, often 20% a year over five. Leaving two months before a cliff can cost several thousand dollars, which is worth checking before accepting another job.
Traditional or Roth
| Traditional | Roth | |
|---|---|---|
| Contributions | Before tax | After tax |
| Tax now | Reduced | No change |
| Growth | Tax deferred | Tax free |
| Withdrawals in retirement | Taxed as income | Tax free |
| Best when | Your rate is higher now | Your rate will be higher later |
The honest answer is that nobody knows their future tax rate, which is why splitting between the two is a common hedge. Younger savers in lower brackets often favour Roth; higher earners near their peak often favour traditional. Employer matches are typically made on a pre-tax basis regardless of which you choose.
Fees
Plan administration and fund expense ratios come straight off your return. The difference between a plan averaging 0.3% and one averaging 1.0% is about 15% of the final balance over thirty years. You usually cannot change the plan, but you can almost always choose the cheapest funds inside it, which is typically a broad index fund rather than a target-date or actively managed option.
If your plan is expensive, a common pattern is to contribute enough to capture the full match, then direct further retirement saving to an IRA with lower-cost options, and return to the 401(k) only after the IRA limit is used.
A worked example
A 35-year-old earning $78,000 with $45,000 already saved, contributing 6% with a 50% match to 6%, assuming 7% returns and 2.5% salary growth, reaches about $1,513,000 at 67. Of that, $225,000 is their own contributions, $113,000 is the employer's and $1,130,000 is growth. Raising the contribution to 10% adds roughly $390,000, entirely from their own money, since the match was already maxed.
Frequently Asked Questions (FAQs)
How much should I contribute to my 401(k)?
At minimum, enough to capture the full employer match, since that is free money. A common overall target is 15% of gross income towards retirement including the match. If 15% is out of reach, start at the match level and raise the percentage with each pay rise.
What is a typical employer match?
Fifty cents per dollar up to 6% of salary, or dollar for dollar up to 3% to 4%, are the two most common structures. Both are worth between 3% and 4% of salary a year, which is a meaningful part of total compensation and is frequently left uncollected.
What happens to my 401(k) if I change jobs?
You can leave it with the old plan, roll it into the new employer's plan, or roll it into an IRA. Cashing it out triggers income tax plus a 10% penalty before age 59½, and it is the most expensive of the four options by a wide margin.
Should I choose traditional or Roth?
Traditional if you expect a lower tax rate in retirement than now; Roth if you expect a higher one. Since neither is knowable, many people split contributions between them. Note that employer matching contributions usually go into the traditional side either way.
What is vesting and why does it matter?
Vesting is when the employer's contributions legally become yours. Cliff vesting gives you everything at a set date, graded vesting releases a share each year. Your own contributions are always vested immediately. Check your schedule before resigning.
Can I contribute too much?
Yes. The IRS sets an annual elective deferral limit, adjusted each year, and exceeding it creates a tax problem that must be corrected before the filing deadline. Payroll systems usually stop you automatically, but not if you changed jobs mid-year and both employers were tracking separately.
Are 401(k) fees really that important?
Yes. A 0.7 percentage point difference in annual costs reduces a thirty-year balance by roughly 15%. On a $1.5m projection that is over $200,000. Check the expense ratios of the funds you hold; it is usually the highest-value hour you can spend on the account.