401k Calculator

Financial experts generally recommend contributing at least enough to get your full employer match — otherwise you're leaving free money on the table. Ideally, aim for 10-15% of your gross salary. The IRS sets annual contribution limits, which are $23,500 for 2025 ($31,000 if you're 50 or older).

Employer matching is when your employer contributes additional money to your 401k based on your own contributions. For example, a common match is 50% of your contributions up to 6% of your salary. If you earn $60,000 and contribute 6% ($3,600), your employer adds $1,800.

Historically, a diversified portfolio of stocks has returned about 7-10% annually before inflation. A 7% return is a commonly used conservative estimate for long-term 401k projections. Your actual returns depend on your investment mix, market conditions, and time horizon.

You can withdraw from your 401k without penalty starting at age 59½. Early withdrawals typically incur a 10% penalty plus income taxes. Required Minimum Distributions (RMDs) begin at age 73. Some plans allow hardship withdrawals for specific financial emergencies.

A traditional 401k uses pre-tax dollars (you pay taxes when you withdraw in retirement), while a Roth 401k uses after-tax dollars (withdrawals in retirement are tax-free). Choose traditional if you expect to be in a lower tax bracket in retirement; choose Roth if you expect higher taxes later.

Yes, you can contribute to both a 401k and an IRA (Individual Retirement Account). However, your ability to deduct traditional IRA contributions may be limited if you're covered by a 401k at work. There are no income limits for contributing to a traditional IRA, but Roth IRA contributions have income limits.

When you leave a job, you have several options for your 401k: leave it with your former employer (if allowed), roll it over to your new employer's 401k, roll it into an IRA, or cash it out (not recommended due to taxes and penalties). A direct rollover to an IRA is often the best choice.

Compound interest means you earn returns not just on your contributions, but also on your previous returns. Over decades, this creates exponential growth. For example, $10,000 growing at 7% annually becomes $76,123 in 30 years — with $66,123 coming purely from compound growth.

A 401k calculator provides estimates based on the assumptions you input (return rate, contributions, etc.). Actual results will vary due to market fluctuations, changes in contribution amounts, and inflation. Use it as a planning tool to understand how different variables affect your retirement savings, not as a guarantee of future returns.