401(k) Calculator
Calculate Your Retirement Savings & See the Power of Compound Growth
💰 Interactive 401(k) Calculator
👤 Your Information
💵 Contributions
Match on your contribution
Historical average: 7-8%
📚 Understanding 401(k) Plans
💼 What is a 401(k)?
Employer-sponsored retirement savings plan where contributions come from pre-tax salary
Key Benefit: Tax-deferred growth + often employer matching
🎁 Employer Match
Free money from employer matching your contributions up to a limit
Example: 50% match on 6% = 3% free money (contribute at least 6%!)
📈 Tax Benefits
Contributions reduce taxable income now; taxes paid at withdrawal in retirement
Save Now: $6,000 contribution = ~$1,500 tax savings (25% bracket)
⏰ Compound Growth
Earnings generate their own earnings over decades of growth
Power: $500/month for 30 years at 7% = $600,000+ vs $180K invested
💵 2025 Contribution Limits & Guidelines
⚠️ Important: IRS sets annual contribution limits that typically increase with inflation. These are 2025 estimates.
Impact of Different Contribution Rates
Based on $75,000 salary, 30 years to retirement, 7% annual return, 50% employer match up to 6%
🔢 401(k) Calculation Formulas
Essential Mathematical Formulas:
1. Future Value with Regular Contributions:
FV = P(1+r)ⁿ + PMT × [((1+r)ⁿ - 1) ÷ r]
Where:
FV = Future value at retirement
P = Current balance (present value)
PMT = Annual contribution (you + employer)
r = Annual return rate (as decimal)
n = Years until retirement
2. Annual Contribution Amount:
Total Contribution = (Your % + Employer %) × Salary
Example: (6% + 3%) × $75,000 = $6,750/year
3. Tax Savings from Contribution:
Tax Savings = Contribution × Marginal Tax Rate
Example: $10,000 contribution × 24% = $2,400 tax savings
4. Employer Match Calculation:
Match = MIN(Your %, Match Limit) × Match Rate × Salary
Example: 50% match on 6% = MIN(6%, 6%) × 50% × $75K = $2,250
5. Rule of 72 (Doubling Time):
Years to Double = 72 ÷ Annual Return Rate
Example: 72 ÷ 8% = 9 years to double your money at 8% return
💡 Essential 401(k) Facts
Critical Information for Retirement Savers:
📌 Always Contribute Enough for Full Match:
Employer match is instant 100% return on your money—literally free cash. If employer matches 50% on first 6%, that's 3% of salary. On $75K, that's $2,250/year free. Over 30 years at 7% return, that match alone grows to $227K. Not taking match = leaving $200K+ on table. Contribute minimum to get full match even if it means cutting other expenses temporarily.
📌 Start Early—Time is Your Biggest Advantage:
Age 25 vs 35: Contributing $500/month from 25-65 (40 years) at 7% = $1.2M. Starting at 35 (30 years) = $600K—half as much! Ten year delay costs $600K. Each decade you wait roughly cuts retirement savings in half. Due to compound interest, early dollars worth 2-3x more than late dollars. Start with anything—even $50/month at 22 beats $500/month at 40.
📌 Increase Contributions With Raises:
When you get a raise, immediately increase 401(k) contribution by at least half the raise amount. Get 4% raise? Increase contribution 2%. You still take home more, but accelerate retirement savings painlessly. Going from 6% to 10% over 4 years via raises doesn't feel like a cut. Target 15-20% total savings (you + match) for comfortable retirement. Many plans offer auto-escalation—use it!
📌 Don't Touch It Before Retirement:
Early withdrawal (before 59½) = 10% penalty + income tax (30-40% total gone). Plus you lose decades of compound growth. $20K withdrawn at 35 would have been $150K at 65. Only exceptions: death, disability, or qualified hardship. Avoid 401(k) loans if possible—if you leave job, loan due immediately or becomes taxable withdrawal. Emergency fund prevents needing to raid retirement.
📌 Asset Allocation Matters More Than Stock Picking:
Your stock/bond mix determines 90% of returns, not which stocks. Young (20s-30s): 90% stocks for growth. Middle age (40s-50s): 70-80% stocks. Near retirement (60+): 50-60% stocks for stability. Use target-date funds for automatic rebalancing. Avoid being 100% bonds young (too conservative) or 100% stocks at 60 (too risky). Rebalance annually. Low-cost index funds beat 90% of actively managed funds.
📌 Watch Out for Fees—They're Wealth Killers:
A 1% fee difference costs 25-30% of your retirement over 40 years. $500K with 0.5% fees becomes $450K with 1.5% fees—$50K to fees! Choose low-cost index funds (expense ratio <0.2%). Avoid funds with loads, 12b-1 fees, or expense ratios >1%. Check plan's total fees including admin costs. If employer plan has high fees, contribute enough for match, then use IRA for additional savings.
❓ Frequently Asked Questions
How much should I contribute to my 401(k)?
Minimum: enough to get full employer match (typically 6%). Target: 15-20% of salary including match for comfortable retirement. If you can't afford 15% now, start at 6% and increase 1-2% annually. Financial advisors recommend: age 30 = have 1x salary saved, age 40 = 3x salary, age 50 = 6x salary, age 60 = 8x salary, retirement = 10-12x final salary. Adjust based on desired retirement lifestyle and other savings.
Should I choose Traditional or Roth 401(k)?
Traditional 401(k): Pre-tax contributions (lower taxable income now), pay taxes in retirement. Best if: (1) Currently in high tax bracket (24%+) (2) Expect lower tax bracket in retirement (3) Want maximum current tax break. Roth 401(k): After-tax contributions, tax-free withdrawals in retirement. Best if: (1) Young/early career with low income (2) Expect higher taxes in future (3) Want tax-free growth. Many experts recommend mix: Traditional for employer match (instant tax break), Roth for your contributions (tax diversification).
What happens to my 401(k) if I change jobs?
You have four options: (1) Leave it with old employer (if balance >$5,000) (2) Roll over to new employer's 401(k) (3) Roll over to IRA (most flexibility, more investment options) (4) Cash out (BAD—taxes + 10% penalty + lost growth). Best option usually: roll to IRA (Vanguard, Fidelity, Schwab) within 60 days. Never cash out—that $50K cashed out at 35 costs you $400K by retirement. Check vesting schedule—you keep all YOUR contributions, but employer contributions may be only partially vested if you leave early.
Can I withdraw from my 401(k) before retirement?
Early withdrawal (before 59½): Generally 10% penalty + income tax (total 30-40% loss). Exceptions to penalty: (1) Age 55+ and retired/terminated (2) Permanent disability (3) Medical expenses >7.5% of income (4) Court-ordered payments (divorce) (5) Substantially equal periodic payments. Hardship withdrawals: Allowed for immediate heavy financial need (medical, prevent foreclosure/eviction, funeral, home purchase) but still taxed + penalized. 401(k) loans: Borrow from yourself, pay back with interest to yourself, but risky—if you leave job, full loan due in 60-90 days or becomes taxable distribution.
What's the difference between 401(k) and IRA?
401(k): Employer-sponsored, higher contribution limits ($23,500 in 2025), employer match available, limited investment options, automatic payroll deduction. IRA (Traditional/Roth): Individual account, lower limits ($7,000 in 2025), no employer match, unlimited investment options, more flexibility. Strategy: (1) Contribute to 401(k) up to full match (free money) (2) Max out IRA if available ($7,000) (3) Return to 401(k) to max if still have funds. Some high earners can't contribute to Roth IRA due to income limits—use "backdoor Roth" or Roth 401(k) instead.
How do Required Minimum Distributions (RMDs) work?
At age 73 (as of 2025), you MUST start taking minimum withdrawals from Traditional 401(k) and Traditional IRA or face 25% penalty on required amount (later reduced to 10%). RMD amount = account balance ÷ life expectancy factor (IRS tables). Example: $500K at 73 with factor 26.5 = $18,868 required withdrawal. These are taxable income. Roth 401(k) also has RMDs (but can roll to Roth IRA to avoid). Penalty for not taking RMD: 25% of amount you should have withdrawn—extremely harsh. Calculate annually as balance changes.
⚠️ Important Disclaimer
This calculator provides estimates for educational and planning purposes only. Results are based on assumptions and simplified models.
Important considerations:
- Investment returns vary annually and are not guaranteed
- Fees, expenses, and taxes significantly impact actual results
- Inflation reduces purchasing power of future dollars
- Contribution limits change annually (IRS adjustments)
- Employer match policies vary by company
- Personal circumstances affect optimal strategy
- Market conditions fluctuate unpredictably
Always consult with qualified financial advisors, tax professionals, and your plan administrator for personalized retirement planning. Past performance does not guarantee future results.
👨🏫 About the Author
Adam Kumar
Co-Founder @ RevisionTown
Adam is a mathematics education expert with extensive experience across multiple international curricula including IB (International Baccalaureate), AP (Advanced Placement), GCSE, IGCSE, and various national systems. His expertise in exponential growth, compound interest calculations, and long-term financial modeling enables him to create sophisticated retirement planning tools.
Through RevisionTown, Adam has helped thousands of students master advanced mathematical concepts including geometric sequences, exponential functions, and the time value of money. This 401(k) calculator applies the same rigorous mathematical principles to help individuals understand the power of compound growth in retirement savings.
Adam's background in teaching complex mathematical formulas across diverse educational systems enables him to translate intimidating financial calculations into clear, actionable insights that empower people to make informed retirement planning decisions.
📧 Email: info@revisiontown.com
💼 LinkedIn: Connect with Adam