401(k) Calculator

What is a 401(k) Calculator?

Our 401(k) calculator is designed to help you project exactly how much your retirement savings will grow over time, utilizing the power of compound interest, ongoing salary contributions, and the highly valuable "free money" from your employer's match program.

How Does a 401(k) Work?

A 401(k) is an employer-sponsored retirement account that allows an employee to dedicate a percentage of their pre-tax salary to a retirement account. These funds are invested in options like mutual funds or index funds.

1. Your Contributions

You choose a percentage of your salary (e.g., 10%) to be automatically deducted from your paycheck and deposited into your 401(k). Because these are pre-tax dollars, it actually lowers your taxable income for the year, saving you money on your income taxes.

2. The Employer Match

Many employers offer a matching contribution to encourage you to save. A common structure is a "50% match up to 6% of your salary." This means if you contribute 6% of your $100,000 salary ($6,000), your employer will put in an additional 3% ($3,000) absolutely free. Always contribute at least enough to get the full employer match!

3. Compound Interest

The true magic of a 401(k) happens over decades. Every year, your investments generate returns (interest, dividends, and market growth). In the following years, you earn returns not just on your original money, but also on the returns you already earned. Over a 30-year career, the interest you earn will drastically outweigh the actual cash you deposited.

The Mathematical Formula