How much should I contribute to my 401k?

Aim for at least 15% of gross income (including employer match) as a general guideline. At minimum, contribute enough to capture the full employer match — that's a 100% immediate return. If you can't afford 15% immediately, increase by 1%–2% annually or whenever you get a raise. The IRS 2026 contribution limit is $23,000/year ($30,500 if 50+ with catch-up contributions).

What is employer 401k matching?

Employer matching is free money your employer contributes to your 401k based on your own contributions. A common formula: employer matches 50% of your contributions up to 6% of salary (so if you contribute 6%, employer adds 3%). Always contribute at least enough to capture the full match — failing to do so means leaving free money on the table. Over a 30-year career, a 3% employer match can add hundreds of thousands to your retirement balance.

What is the 2026 401k contribution limit?

For 2026, the employee contribution limit is $23,000/year. If you're 50 or older, you can make additional catch-up contributions of $7,500, bringing your total to $30,500/year. The total limit (employee + employer combined) is $69,000 ($76,500 if 50+). These limits typically increase annually with inflation. Contributing the maximum each year is one of the most effective ways to build retirement wealth.

Should I choose traditional or Roth 401k contributions?

Traditional 401k contributions are pre-tax (reduces taxable income now, taxed at withdrawal). Roth 401k contributions are after-tax (no deduction now, but tax-free withdrawals in retirement). Choose Roth if you expect higher retirement tax rates (common for young savers and high earners). Choose traditional if you expect lower retirement tax rates (common for peak earners nearing retirement). If unsure, split contributions between both to diversify tax risk.

What rate of return should I expect from my 401k?

For a diversified 60/40 stock/bond portfolio, assume 6%–7% nominal annual returns. For 80/20 or 100% equity, 7%–8% is reasonable. Historical S&P 500 average is ~10% nominal, but use conservative estimates — planning at 6% and earning 8% is far better than the reverse. Always stress-test at 3% below your base case to account for market volatility and sequence-of-returns risk.

When can I withdraw from my 401k without penalties?

You can withdraw from your 401k penalty-free starting at age 59½. Withdrawals before 59½ incur a 10% early withdrawal penalty plus income tax. Exceptions include: disability, certain medical expenses, first-time home purchase (up to $10,000 from IRA), and the Rule of 55 (if you retire at 55+ and leave your job). Required Minimum Distributions (RMDs) begin at age 73 for traditional 401k accounts.

What are catch-up contributions and who is eligible?

Catch-up contributions allow savers 50 and older to contribute extra to their 401k beyond the standard limit. For 2026, the catch-up amount is $7,500, bringing the total employee limit to $30,500. If you're behind on retirement savings, maximize catch-up contributions — combined with maxing out the base limit, you can stash $30,500/year in tax-advantaged growth. Starting at 50 also aligns with peak earning years when many have more disposable income.

How does a 401k loan work and is it a good idea?

A 401k loan lets you borrow up to 50% of your balance (max $50,000) and repay with interest over 5 years (longer for home purchase). While you're paying interest to yourself, there are significant risks: if you leave your job, the loan must be repaid quickly or it becomes a taxable distribution with penalties. You also miss out on investment growth on the borrowed amount. Consider 401k loans only as a last resort — exhaust other options first.

401k Calculator

A 401k calculator is a free online tool that projects your retirement balance with employer match, employee contributions, and investment growth. It shows exactly how much free money you capture from your employer match. Free, no sign-up required.

401k Profile

Annual Income?Your total gross annual income before taxes and deductions.

Employee Contribution Rate?Enter your employee contribution rate.

Employer Match Rate?Enter your employer match rate.

Employer Match Limit?Enter your employer match limit.

Current 401k Balance?Enter your current 401k balance.

Annual Return Rate?Expected annual investment return rate before retirement.

Current Age?Your current age in years.

Retirement Age

End of inputs

Your 401k Projection

Projected Balance

$1,253,660.93

At age 65

Employee Contributions

$224,400.00

Over career

Employer Match

$7,012.50

Free money

Total Contributions

$276,412.50

Including balance

Total Earnings

$977,248.43

77.95% of balance

Years to Retirement

32 → 65

Income: $85,000.00. Employee rate: 8.00%. Employer match: 5.00% of first 5.00% of salary. Current balance: $45,000.00. Rate: 7.00%. Projected balance: $1,253,660.93 ($977,248.43 earnings). Employer contributions: $7,012.50.

401k Growth: Contributions vs. Earnings

Projected 401k Balance Over Time

Key Insights

With 33 years until retirement, compound interest has maximum impact. Maximize contributions now — each dollar saved at age 32 compounds 33 times. Prioritize saving early over catching up later.

Your projected balance of $1,253,660.93 is impressive — investment earnings account for 77.95% of your final balance. This demonstrates the power of long-term compound growth: you contributed $276,412.50 and earned $977,248.43 in returns.

Your 8.00% contribution rate is modest. The IRS allows up to $23,000.00 in 2026 ($30,500.00 if 50+). Increasing to 10%–15% would significantly boost your retirement balance — each 1% increase adds $850.00/year.

You're capturing the full employer match — contributing at least 5.00% of your $85,000.00 salary. Over 33 years, employer contributions add $7,012.50 in free money. This is a 100% immediate return on your matched contributions.

Your current 401k balance of $45,000.00 is on track for age 32. To accelerate, increase contributions by 1%–2% annually or whenever you get a raise.

Guide

How to Use This Calculator

1Enter your annual income — this determines your contribution capacity and employer match.
2Set your employee contribution rate. Aim for 10%–15% of gross income, or at minimum enough to capture the full employer match.
3Input your employer match rate and limit. Common: 50% match up to 6% of salary (rate=50%, limit=6%).
4Enter your current 401k balance across all accounts.
5Choose an annual return rate. Use 6%–7% for balanced portfolios; 7%–8% for equity-heavy.
6Set your current age and target retirement age — this determines your investment horizon.
7Review the projected balance, total contributions, and investment earnings.
8Compare the growth chart to see how employee contributions, employer match, and earnings stack up over time.
9Use the AI insights to identify gaps — increase contributions, capture full match, or adjust retirement age.

Formula

How It's Calculated

401k balance projection (future value with annual contributions):

FV = P × (1 + r)^t + C_employee × [((1 + r)^t − 1) / r] + C_employer × [((1 + r)^t − 1) / r]

Where:
- FV         = projected 401k balance at retirement
- P          = current 401k balance (principal)
- C_employee = annual employee contribution = income × contributionRate
- C_employer = annual employer match = income × min(contributionRate, matchLimit) × matchRate
- r          = annual return rate (decimal, e.g. 0.07 = 7%)
- t          = years to retirement (retirementAge − currentAge)

Example: $85k income, 8% contribution, 5% match of first 5% of salary,
$45k balance, 7% return, age 32→65 (33 years):
- Annual employee contribution = $85,000 × 8% = $6,800
- Annual employer match = $85,000 × min(8%, 5%) × 5% = $212.50
- Total employee contributions = $6,800 × 33 = $224,400
- Total employer contributions = $212.50 × 33 = $7,012.50
- Projected balance ≈ $1,250,000+ (earnings dominate over time)

Glossary

Key Terms

FAQ

Frequently Asked Questions

Scenario Calculators

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