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401(k) Calculator

A 401(k) can be one of your best tools for creating a secure retirement. It provides you with two important advantages. First, all contributions and earnings to your 401(k) are tax-deferred. You only pay taxes on contributions and earnings when the money is withdrawn. Second, many employers provide matching contributions to your 401(k) account. The combined result is a retirement savings plan you cannot afford to pass up.

401(k) Calculator Definitions

Percent to contribute
This is the percentage of your annual salary you contribute to your 401(k) plan each year.

Your annual 401(k) contribution is subject to maximum limits established by the IRS. The annual maximum for 2019 is $19,000. A "catch-up" provision allows employees age 50 and older to contribute an additional $6,000 into their 401(k) account. Employer contributions do not count toward the IRS annual contribution limit.

Employees classified as "Highly Compensated" may be subject to additional limits based on their employer's overall 401(k) participation. If you expect your salary to be $125,000 or more in 2019 or was $120,000 or more in 2018, you may need to contact your employer to see if these additional contribution limits apply to you.

Annual salary
This is your annual salary from your employer, before taxes and other benefit deductions. Since your contribution and employer match are based on the salary paid to you by your employer, do not include any income you may receive from sources other than your employer.
Current age
Your current age.
Age at retirement
Age at which you plan to retire. This calculator assumes that the year you retire, you do not make any contributions to your 401(k). So if you retire at age 65, your last contribution occurs when you are actually 64.
Current 401(k) balance
The starting balance or current amount you have invested or saved in your 401(k).
Annual rate of return
The annual rate of return for your 401(k) account. This calculator assumes that your return is compounded annually and your deposits are made monthly. The actual rate of return is largely dependent on the types of investments you select. The Standard & Poor's 500® (S&P 500®) for the 10 years ending December 31st 2018, had an annual compounded rate of return of 12.1%, including reinvestment of dividends. From January 1, 1970 to December 31st 2018, the average annual compounded rate of return for the S&P 500®, including reinvestment of dividends, was approximately 10.2% (source: www.standardandpoors.com). Since 1970, the highest 12-month return was 61% (June 1982 through June 1983). The lowest 12-month return was -43% (March 2008 to March 2009). Savings accounts at a financial institution may pay as little as 0.25% or less but carry significantly lower risk of loss of principal balances.

It is important to remember that these scenarios are hypothetical and that future rates of return can't be predicted with certainty and that investments that pay higher rates of return are generally subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment. It is not possible to invest directly in an index and the compounded rate of return noted above does not reflect sales charges and other fees that investment funds and/or investment companies may charge.

Annual salary increase
The annual percentage you expect your salary to increase. The calculator assumes that your salary will continue to increase at this rate until you retire.
Employer match
The percentage of your annual 401(k) contributions your employer will match. These contributions are often capped. Please read the definition for "Employer maximum" for more information. Also note employer contributions do not count toward the IRS annual contribution limit.

Matching contributions can also be subject to a vesting schedule. See your plan information for details.

Employer maximum
This is the maximum percent of your salary matched by your employer, regardless of the amount you decide to contribute.

For example, let's assume your employer provides a 50% match on the first 6% of your annual salary that you contribute to your 401(k). If you have an annual salary of $100,000 and contribute 6%, your contribution will be $6,000 and your employer's 50% match will be $3,000 ($6,000 x 50%), for a total of $9,000. If you only contribute 3%, your contribution will be $3,000 and your employer's 50% match will be $1,500, for a total of $4,500.

Now if you increase your contribution to 10%, your contribution will be $10,000, but your employer's 50% match is limited to just the first 6% of your salary. So it would remain $3,000, for a total 401(k) contribution of $13,000.