401(k) Calculator
See how your 401(k) will grow by retirement. Enter your current balance, salary, contribution rate, employer match, and years until retirement.
Maximizing Your 401(k)
The 401(k) is one of the most powerful retirement savings tools available. Contributions come out pre-tax, reducing your current taxable income. The money grows tax-deferred, and many employers match part of what you put in. That match is free money you can't afford to leave on the table.
A typical match is 50% of the first 6% you contribute. If you earn $70,000 and contribute 6% ($4,200), your employer adds $2,100. That's an instant 50% return before any investment gains. Always contribute at least enough to max out the match.
After the match, decide whether to contribute more to the 401(k) or fund a Roth IRA. The 401(k) gives you a tax break now, while the Roth gives you tax-free withdrawals later. High earners often benefit more from the 401(k). Lower earners may prefer the Roth. Many people do both.
Understanding 401(k) Investment Options
Your 401(k) isn't an investment itself—it's an account that holds investments. Most plans offer mutual funds ranging from conservative bond funds to aggressive stock funds. The mix you choose determines your returns and risk.
Target-date funds are popular for beginners. You pick a fund with a year near your retirement (like Target 2055 if you plan to retire around 2055). The fund automatically shifts from stocks to bonds as the target year approaches, reducing risk as you age.
If you prefer to build your own portfolio, follow the rule of 110 or 120: subtract your age from 110 or 120 to get your stock allocation percentage. A 35-year-old might hold 75-85% stocks and 15-25% bonds. Rebalance annually to maintain your target allocation as markets fluctuate.
401(k) Contribution Limits and Catch-Up
The IRS caps how much you can contribute annually. For 2024, the limit is $23,000 for those under 50. If you're 50 or older, you can contribute an additional $7,500 in catch-up contributions, for a total of $30,500.
These limits apply to employee deferrals. Employer match contributions don't count toward your limit. The combined limit for employee and employer contributions is $69,000 in 2024 ($76,500 with catch-up), though few people reach this.
If you can't max out your 401(k), don't stress. Contributing 10-15% including the match is solid. Increase your contribution by 1% each year when you get a raise. You won't notice the difference in your paycheck, but over 30 years it adds up to tens of thousands more in retirement savings.
Frequently Asked Questions
How much should I contribute to my 401(k)?
At minimum, contribute enough to get the full employer match. Ideally, aim for 15-20% of your salary including the match.
What is an employer match?
Many employers match a percentage of your 401(k) contributions. A common match is 50% of the first 6% you contribute, giving you 3% free money.
What's a realistic return rate?
Stock-heavy portfolios historically return 7-10%. Bonds return 3-5%. A balanced portfolio averages 6-8%. Use 7% for a middle estimate.
Should I max out my 401(k)?
After getting the full match, prioritize high-interest debt and an emergency fund. Then max the 401(k) if you can. The 2024 limit is $23,000 under age 50, $30,500 if 50+.
Can I withdraw from my 401(k) early?
You can, but you'll pay income tax plus a 10% penalty before age 59½. Exceptions exist for hardship, disability, or substantially equal periodic payments.