401(k) Contribution Calculator

How a 401(k) works

A 401(k) is an employer-sponsored retirement savings plan that lets you contribute pre-tax dollars from your paycheck. Your contributions reduce your taxable income today, and your investments grow tax-deferred until you withdraw in retirement. Many employers sweeten the deal with a matching contribution.

Understanding employer match

A typical employer match might be “50% of the first 6% of salary.” This means if you contribute at least 6% of your pay, your employer adds another 3%. Not contributing enough to get the full match is leaving free money on the table — it's an instant 50% return before any market gains.

2025 contribution limits

The IRS sets annual limits on 401(k) contributions. For 2025, the employee contribution limit is $23,500 ($31,000 if you're 50 or older). The total limit including employer contributions is $70,000. These limits typically increase with inflation each year.

The power of starting early

Time is the most powerful factor in 401(k) growth thanks to compound interest. Starting at 25 instead of 35 with the same monthly contribution can result in nearly double the balance at 65 — not because you contributed twice as much, but because your money had ten extra years to compound.

The 4% withdrawal rule

The “4% rule” is a widely-used guideline for sustainable retirement withdrawals. It suggests withdrawing 4% of your portfolio in the first year of retirement, then adjusting for inflation each subsequent year. This calculator uses this rule to estimate your monthly retirement income.