How does an employer match work?

Many employers contribute to your 401(k) based on what you put in — for example, 50 cents per dollar up to 6% of your salary. That match is effectively free money, so contributing at least enough to capture the full match is usually the first priority.

How much should I contribute to my 401(k)?

At minimum, enough to get the full employer match. Beyond that, a frequently cited target is 15% of gross income including the match. The right number depends on your age, other savings, and retirement goals.

What return rate should I assume?

Long-run diversified stock-market returns have historically averaged roughly 6–7% a year after inflation, but any single year can be far higher or lower. Running the calculator with a conservative and an optimistic rate shows a realistic range rather than one guaranteed figure.

Are there annual contribution limits?

Yes. The IRS sets a limit each year, with an additional catch-up amount for people age 50 and older. Employer contributions are separate from your own limit. Check the current year’s figures on the IRS website before maximizing contributions.

Calculator

401(k) Calculator

Project your 401(k) retirement savings with employer matching contributions, compound growth, and monthly contributions over time.

Input Details

Currency

Enter every amount below in $. Changing this switches the unit — figures are not converted.

Current Age

Retirement Age

Current 401(k) Balance ($)

Monthly Contribution ($)

Expected Annual Return (%)

Employer Match (%)

Percentage of your contribution that your employer matches

Results

Enter your details and click calculate to see results.

Understanding Your 401(k)

A 401(k) is an employer-sponsored retirement plan that lets you set aside part of each paycheck for the future. Contributions come straight out of your pay before you ever see the money, which makes saving automatic and consistent. Over a full career, steady contributions combined with investment growth can turn modest monthly amounts into a substantial nest egg.

What makes a 401(k) especially powerful is the mix of tax advantages, potential employer matching, and decades of compounding. Understanding how each piece works helps you decide how much to contribute and which type of account fits your situation.

Employee contributions and 2026 limits

You choose what percentage of your salary to contribute, and the IRS sets an annual cap. As of 2026, employees can contribute up to $24,500 of their own money. If you are age 50 or older, a catch-up contribution of an extra $8,000 is allowed, and workers aged 60 to 63 can use a larger "super catch-up" of $11,250 instead. Contributing consistently, even below the maximum, is what matters most over time.

Employer match: do not leave free money on the table

Many employers match a portion of what you contribute. A common formula is 50% of your contributions up to 6% of your salary, though terms vary. This match is effectively a guaranteed return on your savings and is one of the best deals in personal finance. At a minimum, try to contribute enough to capture the full match; anything less leaves free money on the table.

Traditional vs Roth 401(k)

A traditional 401(k) uses pre-tax dollars, lowering your taxable income today, but your withdrawals in retirement are taxed as ordinary income. A Roth 401(k) uses after-tax dollars now, so qualified withdrawals in retirement are tax-free. Traditional often suits those who expect a lower tax rate later, while Roth can favor those who expect higher rates or want tax-free income in retirement.

Compounding and vesting

The real engine of a 401(k) is compounding: your investment returns earn their own returns, and over several decades that growth can dwarf your contributions. Starting early gives your money more time to compound. Keep in mind that employer match dollars may be subject to a vesting schedule, meaning you earn full ownership of them only after staying with the company for a set number of years. Your own contributions are always 100% yours.

Answers

Frequently asked questions

: Many employers contribute to your 401(k) based on what you put in — for example, 50 cents per dollar up to 6% of your salary. That match is effectively free money, so contributing at least enough to capture the full match is usually the first priority.
: At minimum, enough to get the full employer match. Beyond that, a frequently cited target is 15% of gross income including the match. The right number depends on your age, other savings, and retirement goals.
: Long-run diversified stock-market returns have historically averaged roughly 6–7% a year after inflation, but any single year can be far higher or lower. Running the calculator with a conservative and an optimistic rate shows a realistic range rather than one guaranteed figure.
: Yes. The IRS sets a limit each year, with an additional catch-up amount for people age 50 and older. Employer contributions are separate from your own limit. Check the current year’s figures on the IRS website before maximizing contributions.