Plan Your 401(k) Retirement Savings
A 401(k) is the most powerful retirement tool available to most American workers. Pre-tax contributions reduce your taxable income today, grow tax-deferred for decades, and often come with an employer match that is literally free money. This calculator shows how much your 401(k) will grow by retirement.
What Is a 401(k)?
A 401(k) is an employer-sponsored retirement account. You contribute a portion of each paycheck before income tax is withheld, so every dollar you contribute reduces your current tax bill.
2026 Contribution Limits
| Category | 2026 Limit |
|---|---|
| Employee elective deferral | $23,500 |
| Catch-up (age 50+) | +$7,500 |
| Super catch-up (age 60-63) | +$11,250 |
| Total (employee + employer) | $70,000 |
Employer Match - The Free Money
Most employers match a percentage of your contributions. Common structures:
- 50% match up to 6% of salary - effectively 3% of your income
- 100% match up to 4% of salary - effectively 4%
- Dollar-for-dollar up to a cap
Always contribute at least enough to earn the full match. Not doing so is leaving free money on the table.
Worked Example: $75,000 Salary, 10% Contribution
- Annual contribution: $7,500
- Employer match (4%): $3,000
- Total annual investment: $10,500
- Assumed return: 7% annually
- After 30 years: $1,000,000+
- Without match: ~$710,000
- The match alone adds $290,000
Traditional vs Roth 401(k)
| Feature | Traditional | Roth |
|---|---|---|
| Contribution tax | Pre-tax | After-tax |
| Withdrawal tax | Taxed as income | Tax-free |
| Best when | Higher tax bracket now | Lower bracket now |
| Required minimum distributions | Yes at 73 | Yes at 73 |
| Contribution limit | Same | Same |
How to Maximize Your 401(k)
- Contribute at least the full employer match
- Increase your contribution 1% each year
- Max out at $23,500 if you can afford it
- Use catch-up contributions if you are 50+
- Choose low-fee index funds (expense ratios under 0.20%)
- Do not borrow from it unless it is a true emergency
Frequently Asked Questions
What is a good 401(k) match?
The average is 3-5% of salary. A 50% match up to 6% is standard. Anything above 5% effective is generous.
Should I do traditional or Roth?
If you are in a high tax bracket now, traditional. If early in your career, Roth. Many people split contributions.
What happens if I leave my job?
You can leave the 401(k), roll it into an IRA, or roll into a new employer plan. Never cash it out - you will pay income tax plus 10% penalty.
Can I withdraw before 59 1/2?
Yes, but you pay income tax plus a 10% penalty except for specific hardship cases. Some plans allow loans.
How much should I have by age 40?
A common guideline: 3x your salary by 40, 6x by 50, 8x by 60, 10x by 67.
What is vesting?
Employer match often vests over time (e.g., 20% per year for 5 years). If you leave before full vesting, you forfeit unvested match.