What is the 401(k) Retirement Calculator?
This calculator is designed for the United States 401(k) employer-sponsored retirement plan. It estimates how much your account could be worth at retirement based on your current balance, your monthly contributions, your employer's match, your expected annual return, and the number of years until you retire. Results are projections only and do not account for taxes, fees, contribution limits, or inflation.
How to use it
Enter your current 401(k) balance, your monthly contribution in dollars, the dollar amount your employer matches each month, your expected average annual return (the long-run U.S. stock market average is often assumed near 7%), and the number of years until you retire. The calculator compounds everything monthly and shows your projected balance, total money put in, and the portion that is investment growth.
The formula explained
The projection combines two parts: the future value of your existing balance and the future value of a stream of monthly deposits (an ordinary annuity). With monthly rate \(r/12\) and \(n = 12t\) months:
$$FV = P\left(1+\frac{r}{12}\right)^{12t} + (C+M)\cdot\frac{\left(1+\frac{r}{12}\right)^{12t}-1}{\frac{r}{12}}$$
Here \(P\) is the starting balance, \(C\) your monthly contribution, \(M\) the employer match, \(r\) the annual return, and \(t\) the number of years.
Worked example
Suppose \(P = \$25{,}000\), \(C = \$500\), \(M = \$250\), \(r = 7\%\) and \(t = 30\) years. The monthly rate is \(0.07/12 \approx 0.0058333\) and \(n = 360\) months. The growth factor \((1.0058333)^{360} \approx 8.1164\). The balance grows to \(\approx \$202{,}910\), and the \(\$750/\text{month}\) deposits grow to \(\approx \$914{,}434\), for a projected total of about $1,117,344. Of that, roughly $295,000 is money contributed and about $822,344 is investment growth.
2024 IRS 401(k) Contribution Limits
The IRS sets annual limits on how much you and your employer can contribute to a 401(k) plan. These limits are adjusted periodically for inflation. Understanding them helps you set realistic values for the Monthly Contribution and Employer Match inputs in the calculator.
| Limit Type | 2024 Amount | Notes |
|---|---|---|
| Employee elective deferral limit | $23,000 | Maximum you can defer from salary (pre-tax + Roth combined). |
| Catch-up contribution (age 50+) | $7,500 | Additional amount allowed if you are 50 or older during the year. |
| Total elective deferral with catch-up | $30,500 | $23,000 + $7,500 for those 50 and over. |
| Combined employee + employer limit | $69,000 | Section 415(c) cap on all contributions (your deferrals + employer match + profit sharing). |
| Combined limit with catch-up (age 50+) | $76,500 | $69,000 + $7,500 catch-up. |
The $23,000 elective deferral limit applies across all 401(k) and 403(b) plans you participate in during the year, not per employer. Employer matching dollars count toward the higher $69,000 combined limit but not toward your personal $23,000 deferral limit.
Key Terms Explained
- 401(k)
- An employer-sponsored, tax-advantaged US retirement savings plan that lets employees defer part of their salary into investments, often with an employer match.
- Employer match
- Money your employer contributes to your 401(k) based on your own contributions — for example, 50% of your deferrals up to 6% of pay. In the formula this is \(M\), the monthly match amount.
- Vesting
- The schedule by which employer-contributed funds become fully yours. Your own contributions are always 100% vested; employer match may vest gradually over several years.
- Elective deferral
- The portion of your salary you choose to contribute to the 401(k), subject to the annual IRS limit ($23,000 in 2024).
- Current balance (B)
- The amount already in your 401(k) today; it grows with compounding over the projection period.
- Monthly contribution (C)
- The dollar amount you personally add to the account each month.
- Match (M)
- The monthly employer match added alongside your contribution in the future-value formula.
- Expected annual return (r)
- The assumed average yearly investment growth rate. In the formula it is converted to a monthly rate, \(r = \frac{\text{Annual Rate}}{1200}\).
- Compounding
- Earning returns on both your principal and previously earned returns. Here returns compound monthly over \(n = 12 \times \text{Years}\) periods.
- Future value (FV)
- The projected total balance at retirement, combining the grown starting balance and the accumulated stream of contributions and match.
FAQ
Does this include employer match limits or IRS contribution caps? No. It assumes the dollar amounts you enter are contributed every month; you should confirm they stay within annual IRS limits.
Are deposits added at the start or end of each month? This model uses end-of-month (ordinary annuity) timing, the standard convention for these projections.
Is the return guaranteed? No. Actual returns vary year to year; this is an estimate based on a constant assumed rate.
