401(k) Retirement Calculator

How 401(k) Retirement Savings Work

A 401(k) is an employer-sponsored retirement savings plan that allows you to save and invest a portion of your paycheck before taxes are taken out (Traditional) or after taxes (Roth). Many employers match a portion of your contributions, making it one of the most powerful wealth-building tools available to American workers.

2024 Contribution Limits

• Employee contribution limit: $23,000
• Catch-up contribution (age 50+): additional $7,500 (total $30,500)
• Total limit including employer match: $69,000 ($76,500 for 50+)
• IRA contribution limit: $7,000 ($8,000 for 50+)

Tax Advantages

Traditional 401(k): Contributions reduce your current taxable income. A $23,000 contribution in the 24% bracket saves $5,520 in taxes this year. You pay taxes on withdrawals in retirement. Roth 401(k): No immediate tax break, but all qualified withdrawals in retirement (including investment gains) are 100% tax-free.

Growth Example: $500/month at 7% Return

• After 10 years: ~$86,000 (contributed $60,000)
• After 20 years: ~$260,000 (contributed $120,000)
• After 30 years: ~$607,000 (contributed $180,000)
• After 40 years: ~$1,320,000 (contributed $240,000)

Notice how compound growth becomes increasingly dramatic over time -- the final decade alone adds more than the first 30 years combined.

Common Employer Match Formulas

• 100% match up to 3% of salary (generous)
• 50% match up to 6% of salary (most common)
• Dollar-for-dollar up to 4% of salary
• No match (still worth contributing for tax benefits)

Maximizing Your Savings

Always contribute enough to capture your full employer match first. Then consider increasing contributions by 1% each year or directing raises to your 401(k). If you max out your 401(k), consider contributing to an IRA or HSA for additional tax-advantaged savings. Target saving 15-20% of your gross income for retirement across all accounts.

Important Notes

Early withdrawals before age 59 1/2 typically incur a 10% penalty plus income taxes. Required Minimum Distributions (RMDs) begin at age 73 for Traditional accounts. This calculator provides estimates based on constant returns; actual market returns fluctuate. Consider consulting a financial advisor for personalized retirement planning.