Enter your age, the age you plan to retire and your current 401K balance. Then add your yearly salary and the percentage of it that you put into the plan. If your employer matches your contributions, enter the match rate and the limit. For example, a fifty percent match up to six percent of salary means your employer adds fifty cents for each dollar you put in, until your contribution reaches six percent of your pay.
You can also enter a yearly salary raise, the return you expect and a yearly contribution limit if you want your own contributions capped. Add an inflation rate to see the final balance in today’s money.
After you press Calculate, you will see your balance at retirement, how much came from you, how much came from your employer and how much is investment growth. A table lists the balance for every year of saving. The last line shows a rough yearly income using a four percent withdrawal, which many people use as a starting guide. If the number looks low, try raising your contribution by one or two percent and see how much it changes.
Each year your contribution is: salary x your percentage, capped at the contribution limit if you set one. The employer match is the smaller of your contribution and (salary x match limit percentage), multiplied by the match rate.
Contributions are added monthly, one twelfth of the yearly amount. Each month the balance is multiplied by (1 + monthly return) and the monthly contributions are added. The monthly return is (1 + yearly return) raised to 1/12, minus 1. Salary grows by the raise percentage at the start of each new year. Growth is the final balance minus the starting balance and all contributions.