401(k) Retirement Calculator

Understanding Your 401(k) Plan

A 401(k) is a feature of a qualified profit-sharing plan that allows employees to contribute a portion of their wages to individual accounts. Using this 401(k) Calculator, you can visualize how your contributions, combined with your employer's match and the power of compound interest, can grow into a substantial retirement fund.

The "Free Money" Factor: Employer Match

The most powerful component of a 401(k) is the employer match. This is essentially free money.

• How it works: If your company matches 50% of your contributions up to 6% of your salary, and you contribute 6%, they add an extra 3% of your salary to your account.
• Strategy: Financial advisors almost universally recommend contributing at least enough to get the full employer match. Otherwise, you are leaving part of your compensation on the table.

Key Assumptions in This Calculator

Salary Increase

We assume your salary will grow over time (due to raises or promotions). A standard conservative estimate is 2-3% annually to keep up with inflation.

Rate of Return

Historically, the stock market (S&P 500) has returned about 10% annually before inflation. However, a diversified portfolio might target 6-8% for a more conservative estimate.

Compounding Frequency

This calculator compounds interest annually for simplicity, which provides a close approximation for long-term planning.