Retirement Savings Projection
Last reviewed: May 2026
A 401(k) calculator projects how your workplace retirement savings will grow over time based on your contributions, employer match, investment returns, and time horizon. It answers the most important retirement planning question: "Am I saving enough?" The 401(k) is the backbone of American retirement savings — employer-sponsored, tax-advantaged, and often enhanced with matching contributions that represent an immediate 50–100% return on your money. Missing out on the full employer match is the single most expensive financial mistake most workers make.1
| Salary | Contribution Rate | Employer Match (50% up to 6%) | Balance at 65 (start at 30, 7%) |
|---|---|---|---|
| $75,000 | 6% ($4,500/yr) | $2,250/yr | $704,000 |
| $75,000 | 10% ($7,500/yr) | $2,250/yr | $1,017,000 |
| $75,000 | 15% ($11,250/yr) | $2,250/yr | $1,409,000 |
| $100,000 | 10% ($10,000/yr) | $3,000/yr | $1,356,000 |
| $100,000 | 15% ($15,000/yr) | $3,000/yr | $1,878,000 |
*Assumes 7% average annual return, starting at age 30 with $0 balance, no salary increases.
| Category | 2025 Limit |
|---|---|
| Employee contribution (under 50) | $23,500 |
| Catch-up (age 50+) | +$7,500 = $31,000 total |
| Super catch-up (age 60–63) | +$11,250 = $34,750 total |
| Combined employee + employer limit | $70,000 ($77,500 with catch-up) |
An employer match is free money — and the return is immediate. A 50% match on 6% of salary means for every $100 you contribute, your employer adds $50. That is an instant 50% return before any market growth. On a $75,000 salary with this match structure, contributing 6% means $4,500 from you and $2,250 from your employer — $6,750 total. Over 35 years at 7% returns, the employer's $2,250 annual contribution alone grows to approximately $334,000. Not contributing enough to capture the full match is the financial equivalent of declining a raise.2
Most employers now offer both options. Traditional 401(k) contributions are pre-tax — they reduce your current taxable income but are taxed as ordinary income when withdrawn. Roth 401(k) contributions are after-tax — no deduction now, but qualified withdrawals in retirement are completely tax-free. The decision hinges on whether your tax rate will be higher or lower in retirement. Many advisors recommend splitting contributions between both for tax diversification — it gives you a taxable and a tax-free bucket to draw from in retirement, providing flexibility to manage your effective tax rate year by year.3
When you leave an employer, you have four options for your 401(k): leave it in the former employer's plan (if allowed), roll it into your new employer's plan, roll it into an IRA, or cash it out. Cashing out triggers income tax plus a 10% early withdrawal penalty if you're under 59½ — on a $50,000 balance, you might net only $32,500 after a 25% tax bracket and the penalty. Rolling to an IRA typically offers the widest investment selection and lowest fees. The rollover must be completed within 60 days of distribution to avoid tax consequences, though a direct trustee-to-trustee transfer eliminates this deadline risk entirely.
When you leave an employer, you have four options for your 401(k): leave it in the former employer's plan (if allowed), roll it into your new employer's plan, roll it into an IRA, or cash it out. Cashing out triggers income tax plus a 10% early withdrawal penalty if you're under 59½ — on a $50,000 balance, you might net only $32,500 after a 25% tax bracket and the penalty. Rolling to an IRA typically offers the widest investment selection and lowest fees. The rollover must be completed within 60 days of distribution to avoid tax consequences, though a direct trustee-to-trustee transfer eliminates this deadline risk entirely.
When you leave an employer, you have four options for your 401(k): leave it in the former employer's plan (if allowed), roll it into your new employer's plan, roll it into an IRA, or cash it out. Cashing out triggers income tax plus a 10% early withdrawal penalty if you're under 59½ — on a $50,000 balance, you might net only $32,500 after a 25% tax bracket and the penalty. Rolling to an IRA typically offers the widest investment selection and lowest fees. The rollover must be completed within 60 days of distribution to avoid tax consequences, though a direct trustee-to-trustee transfer eliminates this deadline risk entirely.
When you leave an employer, you have four options for your 401(k): leave it in the former employer's plan (if allowed), roll it into your new employer's plan, roll it into an IRA, or cash it out. Cashing out triggers income tax plus a 10% early withdrawal penalty if you're under 59½ — on a $50,000 balance, you might net only $32,500 after a 25% tax bracket and the penalty. Rolling to an IRA typically offers the widest investment selection and lowest fees. The rollover must be completed within 60 days of distribution to avoid tax consequences, though a direct trustee-to-trustee transfer eliminates this deadline risk entirely.
When you leave an employer, you have four options for your 401(k): leave it in the former employer's plan (if allowed), roll it into your new employer's plan, roll it into an IRA, or cash it out. Cashing out triggers income tax plus a 10% early withdrawal penalty if you're under 59½ — on a $50,000 balance, you might net only $32,500 after a 25% tax bracket and the penalty. Rolling to an IRA typically offers the widest investment selection and lowest fees. The rollover must be completed within 60 days of distribution to avoid tax consequences, though a direct trustee-to-trustee transfer eliminates this deadline risk entirely.
A 401(k) is a tax-advantaged retirement account offered by employers. The fundamental advantage is triple: tax-deductible contributions reduce your current tax bill, investments grow tax-deferred for decades, and many employers match a portion of your contributions — which is literally free money1.
For 2026, the employee contribution limit is $23,500 (up from $23,000 in 2025). Workers aged 50 and older can contribute an additional $7,500 in catch-up contributions, bringing their total to $31,000. The total contribution limit including employer matching is $70,0002. These limits are adjusted annually for inflation by the IRS.
Worked example: Your employer offers a 50% match on the first 6% of salary. If you earn $80,000 and contribute 6% ($4,800/year), your employer adds $2,400. That's an instant 50% return before any market gains. If you only contribute 3%, you're forfeiting $1,200/year in free money — over a 30-year career at 7% growth, that's approximately $113,000 left on the table3.
The most common match formulas are: 50% of the first 6% (effectively 3% of salary), 100% of the first 3% then 50% of the next 2% (effectively 4% of salary), and dollar-for-dollar up to 4–6%. Check your plan documents for the exact formula.
A traditional 401(k) is funded with pre-tax dollars — you get a tax deduction now but pay income tax on withdrawals in retirement. A Roth 401(k) is funded with after-tax dollars — no deduction now, but withdrawals in retirement are completely tax-free4.
The general guideline: if you expect your tax rate to be higher in retirement (early career, expect significant income growth, tax rates may rise), choose Roth. If your rate will be lower in retirement (peak earning years, plan to retire in a low-tax state), choose traditional. Many advisors recommend splitting contributions between both for tax diversification.
Withdrawing before age 59½ triggers a 10% penalty plus ordinary income tax. On a $20,000 early withdrawal in the 22% bracket, you'd owe $4,400 in income tax plus $2,000 in penalty — losing 32% immediately. But the real cost is the lost growth: that $20,000 left invested for 20 more years at 7% would have become approximately $77,400. The true cost of the early withdrawal is closer to $57,400 in lost future wealth.
Most 401(k) plans offer a menu of mutual funds. A simple, effective allocation for someone decades from retirement is a target-date fund matching your expected retirement year — it automatically shifts from aggressive to conservative as you age. If you prefer to self-direct, a common approach is: your age in bonds (a 30-year-old holds 30% bonds, 70% stocks), heavy on low-cost index funds, and minimal individual company stock (limit employer stock to under 10% to avoid concentration risk).
Starting at age 73 (under current SECURE 2.0 rules), you must begin withdrawing from traditional 401(k) accounts. The amount is calculated by dividing your account balance by an IRS life expectancy factor. Failure to take RMDs results in a 25% penalty on the amount you should have withdrawn. Roth 401(k) accounts are now exempt from RMDs starting in 2024, which is a significant planning advantage.
If your 401(k) plan allows after-tax contributions beyond the $23,500 employee limit, you may be able to contribute up to the total $70,000 cap and then convert those after-tax contributions to a Roth — either within the plan (in-plan conversion) or by rolling them to a Roth IRA. This "mega backdoor Roth" strategy lets high earners shelter $35,000–$46,500 additional dollars per year in tax-free Roth accounts. Not all plans allow this, so check your plan document or ask your HR department.
You have four options: leave it in the old plan (if the balance exceeds $5,000), roll it to your new employer's plan, roll it to an IRA, or cash it out. Cashing out triggers the 10% penalty plus income taxes — almost never the right choice. Rolling to an IRA typically offers the widest investment selection and lowest fees. Rolling to a new employer plan keeps the money in a 401(k), which provides stronger creditor protection in most states and allows penalty-free withdrawals starting at age 55 if you leave that employer (the "Rule of 55").
Most plans let you borrow up to 50% of your vested balance or $50,000 (whichever is less). You repay with interest — but the interest goes back into your own account. The risk: if you leave your job (voluntarily or not), the full balance is typically due within 60–90 days. If you can't repay, it becomes a taxable distribution with the 10% penalty. 401(k) loans can make sense for short-term bridge financing (avoiding PMI on a home purchase, for example), but they're dangerous if your job stability is uncertain.
→ Never leave match money on the table. Contribute at least enough to capture your full employer match. It's an immediate 50–100% return on your money.
→ Increase contributions with every raise. Bump your rate by 1% each year. You'll barely notice the paycheck difference but the compounding impact is enormous.
→ Check your fund expenses. A 1% fee difference on a $500K balance costs $5,000/year. Use low-cost index funds when available — target-date funds are also a solid set-and-forget option.
→ Consider the Roth 401(k) option. If your employer offers it, splitting between traditional and Roth gives you tax diversification in retirement.
See also: Roth IRA · Tax Calculator · Compound Interest · Social Security