401k Calculator

A 401(k) is an employer-sponsored retirement savings plan that offers powerful tax advantages unavailable to ordinary brokerage accounts. Understanding how to maximize it is one of the highest-ROI financial decisions you can make.

Traditional 401(k) contributions are made pre-tax — meaning a $1,000 contribution only reduces your take-home pay by $750 if you're in the 25% tax bracket, because $250 that would have gone to taxes is now invested instead. Your money grows tax-deferred until withdrawal in retirement, when you pay income tax on it.

The employer match is often described as the best guaranteed return in investing — and it's true. A 100% match on the first 3% of your salary is an instant 100% return on that portion, before any market growth. Never leave free employer match money unclaimed.

Time is your most powerful asset in retirement investing. Starting at 25 instead of 35 can mean hundreds of thousands of dollars more at retirement — even with smaller contributions — because of how compound growth works over decades. The Rule of 72 tells you how quickly money doubles: divide 72 by your expected annual return to get years to double. At 7% return, your money doubles every ~10 years.

The 2025 contribution limit is $23,500 for those under 50. If you're 50 or older, you can contribute an additional $7,500 (catch-up contribution), for a total of $31,000. These limits are adjusted by the IRS periodically for inflation.

Roth 401(k) plans are also offered by many employers. Instead of pre-tax contributions, you contribute after-tax dollars but your withdrawals in retirement are entirely tax-free. Roth is generally better if you expect to be in a higher tax bracket in retirement than you are today.

Consistently contributing, capturing the full employer match, and leaving the money invested through market cycles are the three most important 401(k) success factors.