How This 401(k) Calculator Works
A 401(k) grows from three fuel sources: your contributions, your employer's match, and compound returns on everything already invested. This calculator simulates each year from now until your retirement age: it computes that year's employee contribution (salary × your contribution %), adds the employer match (salary × match %, capped at what you contributed), grows the whole balance by the expected return, then raises your salary by the salary-growth rate and repeats. Contributions are assumed to flow in steadily through the year, so growth is credited on the year's average invested amount.
The per-year logic:
growth = (start balance + contributions ÷ 2) × return%end balance = start balance + your contribution + employer match + growth
then
salary ×= (1 + salary growth%) and the next year begins.
Worked example: age 30, retiring at 65, $25,000 saved, $90,000 salary, 10% contribution, 4% match, 7% return, 2.5% salary growth. In year one you contribute $9,000 and your employer adds $3,600; growth on the ~$31,300 average invested adds about $2,190, ending year one near $39,800. Repeated for 35 years, the balance lands around $2.1 million — of which only about $640,000 is money anyone put in. The other ~$1.5 million is pure compounding. That ratio is the entire argument for starting early: time does more work than dollars.
The year-by-year table makes the compounding visible — watch how the "growth" column starts small and eventually dwarfs the "contributions" column. That's the crossover every saver is racing toward: the point where your money earns more than you do.
Practical tips
If your employer matches 50% up to 6% of salary, contributing 6% earns an instant 50% return no market can promise. It's the highest guaranteed return in personal finance.
Financial planners' classic rule: save 15% of gross pay (your contribution + employer match) starting in your 20s–30s. Behind? Raise your rate 1% each year — you won't feel it, but retirement-you will.
Starting at 25 instead of 35 can roughly double your final balance at the same contribution rate. If you're starting late, the lever that matters most is contribution rate, not picking hot stocks.
7% nominal is common for a stock-heavy portfolio, but planning at 5–6% builds in a margin of safety. Run both above and compare — the gap is your plan's sensitivity to market reality.
The IRS lets employees defer $24,500 into a 401(k) in 2026 (under 50). If the calculator shows you contributing more than that, the excess assumption is unrealistic — cap it.