How the 401(k) calculator works
A 401(k) is a workplace retirement plan in the US. You choose a percentage of each paycheck to put in, your employer may add a match, and the money is invested until you retire. The calculator projects your balance one year at a time.
- Your contribution is your percentage of pay, capped at the IRS limit for your age.
- Your employer’s contribution follows the match formula you enter, plus any profit-sharing contribution.
- Growth. Each year’s contributions go in as 12 equal monthly amounts, and the whole balance grows at your expected return, compounded monthly.
- Your salary rises by the pay increase you enter, so your contributions rise too.
Balance after a month = balance × (1 + r)^(1/12) + this month’s contributions
The result is shown in future dollars and in today’s money, which divides by (1 + inflation)^years. Today’s money is the more honest number to plan with.
2026 401(k) limits
The IRS adjusts the limits every year for inflation. These are the figures for 2026, from IRS News Release IR-2025-111 and Notice 2025-67.
| Limit | 2026 amount |
|---|---|
| Your own contributions (pre-tax and Roth combined) | $24,500 |
| Catch-up if you are 50 or older by 31 December | + $8,000 (total $32,500) |
| Higher catch-up if you turn 60, 61, 62 or 63 in 2026 | + $11,250 instead (total $35,750) |
| You plus your employer, not counting catch-ups | $72,000 |
| Most pay that counts for contributions | $360,000 |
Two rules from the SECURE 2.0 Act matter here.
- The age 60–63 “super catch-up”. If you turn 60 to 63 during the year, your catch-up rises from $8,000 to $11,250, as long as your plan offers it. At 64 it drops back to the normal catch-up.
- Roth catch-ups for higher earners. From 2026, if your FICA wages from your employer were over $150,000 in 2025, your catch-up contributions must go in as Roth (taxed now, tax-free later). Final IRS rules apply from 2027, and plans can follow a good-faith reading of the law in 2026.
The calculator keeps future limits at 2026 levels unless you choose a yearly increase under “More options”. That is cautious: in practice the limits rise over time.
How employer matching works
A match is free money, so the first goal for most people is to contribute enough to get all of it. Matches are usually written as “X% of the first Y% of pay”.
Example: 50% of the first 6%. On a $60,000 salary, 6% is $3,600. Your employer adds half of that, $1,800. If you only put in 3% ($1,800), the employer adds $900, and you miss $900 a year.
Example: 100% of the first 3% plus 50% of the next 2%. This common “safe harbor” formula gives a 4% match if you contribute 5%. On a $75,000 salary, contributing 5% ($3,750) brings $2,250 + $375 = $2,625 from your employer.
Employer money may follow a vesting schedule, so you might need to stay a few years before all of it is yours. Your plan documents explain the schedule.
Worked example
Take someone aged 35 earning $75,000, with $25,000 already saved. They contribute 6% and get the safe harbor match above (4% of pay). Their pay rises 3% a year, and investments return 6% a year until they retire at 67.
- They contribute about $236,000 over 32 years, and their employer adds about $158,000.
- Investment growth adds about $739,000, almost twice what was paid in.
- The projected balance is about $1.16 million, or roughly $525,000 in today’s money at 2.5% inflation.
Small changes make a big difference over 32 years. At 4% of pay (still the full match), the balance would be about $908,000. At 10%, it would be about $1.56 million.
Traditional or Roth?
Most plans let you choose between two kinds of contributions. The same limits apply to both combined.
- Traditional (pre-tax) contributions lower your taxable income now. In the 22% bracket, $4,500 of contributions saves about $990 of federal income tax this year. You pay income tax when you withdraw in retirement.
- Roth contributions are made after tax, but qualified withdrawals in retirement are tax-free.
If you expect a higher tax rate in retirement than today, Roth often wins. If you expect a lower rate, traditional often wins. Many people split their contributions between the two.
Tips
- Get the full match first. It is an instant 50% or 100% return on that part of your money.
- Raise your rate by 1% each year, for example when you get a pay rise. You will barely notice it in your paycheck.
- Watch the fees. A fund that charges 1% a year instead of 0.1% can cost you a large slice of your final balance. Enter the expected return after fees.
- Test a range of returns. Try 4%, 6% and 8% to see a cautious, middle and hopeful outcome.
To see how long your savings will last once you stop working, use the retirement calculator. To see how a contribution changes your take-home pay, try the paycheck calculator. The compound interest calculator shows the same growth maths for any savings account.
This calculator is for education and planning. It is not tax or investment advice, and your plan’s rules decide what you can contribute.