# 401(k) Savings Calculator

This 401(k) Savings Calculator allows you to examine the investment potential of a 401(k) account over a number of years. It not only lets you see how your investments would grow at a given rate of return, but also lets you take into account other variables that will determine the eventual size of your nest egg. It's fairly easy to determine the growth of an investment with a fixed rate of return and uniform contributions over a given number of years. But in the real world, 401(k)s don't act that way. Your rate of return is unpredictable. Your salary, and therefore your contributions and employer match will likely increase over time. You may delay or hasten your retirement date. The 401(k) Savings Calculator allows you to take all of those into account. While it's impossible to exactly predict the future, the calculator makes it easy to explore how variations in your rate of return and other factors will affect the growth of your investment, giving you a range of likely outcomes and letting you see what sort of changes can better help you meet your investment goals.

## 401(k) Employee Savings Plan:Press spacebar to hide inputs |

## 401(k) Employer Match:Press spacebar to hide inputs |

## 401(k) Balance by Yearpress spacebar to hide graph |

## Using the 401(k) Savings Calculator

This calculator can help you with the following:

- Predicting the performance of your 401(k)
- Estimating how much you'll have available for retirement
- Figuring out how long you'll need to work and contribute to your account in order to retire comfortably
- See what the long-term impact would be of increasing or decreasing your contributions
- Gauging how a stronger- or weaker-than-expected rate of return will affect the long-term performance of your investments
- Determining how increased contributions due to regular raises in earnings and contributions will affect your 401(k)

To use it, you need to enter:

- The percentage of your salary that you contribute to your 401(k),
- Your current annual salary,
- Your expected annual salary increase,
- Your age,
- The age at which you plan to retire,
- The current balance in your 401(k),
- The expected annual rate of return for your 401(k),
- The percentage of your salary that your employer will provide as a matching contribution, and
- Your employer's contribution cap – i.e., the maximum percentage of your salary it will contribute, regardless of your own contribution.

If you have questions about any of these, you can click on the name of the field for more information.

The calculator will use these figures to determine how much you and your employer will contribute to your 401(k) over the years. Based on that, it will calculate how much your investments will earn between now and when you retire.

## About 401(k) accounts

There are many different types of retirement savings accounts that you can use to prepare for your financial future. One of the most popular is the 401(k).

A 401(k) is what's known as a tax-preferred retirement account, one that offers certain tax advantages over regular savings or investing. In a traditional 401(k), your contributions are pre-tax – that is, any contributions you make up to a certain limit ($18,000 per year standard; up to $24,000 for those age 50 and older making "catch-up" contributions) are pre-tax; that is, they reduce your taxable income by the amount you contribute to the account.

Your earnings also grow tax-free, but the money you withdraw upon retirement is considered taxable income.

A second type is a Roth 401(k). With a Roth, you make your contributions in post-tax dollars; that is, your contributions to the account don't reduce your tax bill. However, your earnings grow tax-free and the money you take out at retirement is nontaxable as well.

The other thing that makes 401(k) plans very popular is that they often feature an employer match, where the employer kicks in a certain amount in addition to the employee's contribution. This is usually a certain proportion of the employee's own contribution, perhaps half or even equal to it, and is in addition to the employee's regular income.

Money in a 401(k) should be untouched until retirement. There is a 10 percent tax penalty on withdrawals from a traditional 401(k) before age 59 1/2; contributions to a Roth 401(k) can be withdrawn without penalty at any time, but there is a penalty on withdrawals of earnings prior to age 59 ½.

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