Complete guide
Reviewed July 2026A 401(k) is the workhorse of American retirement saving, and its power comes from three forces stacked together: your own contributions, your employer's match, and decades of tax-advantaged compounding. Small changes to any one of them — a percentage point more saved, a match fully captured, a few extra years invested — can swing the final balance by hundreds of thousands of dollars.
This calculator projects your 401(k) balance at retirement from your current savings, annual contributions, employer match and an expected rate of return. It compounds every year so you can see not just what you put in, but what that money earns on your behalf while you sleep.
Below we explain how the match works (and why skipping it is the most expensive mistake in personal finance), how compounding builds the bulk of your balance, and the contribution limits and levers that let you steer toward your number.
How your 401(k) grows
Each year your balance earns a return on everything already invested, then your new contributions and the employer match are added. Repeating that loop for decades is what turns modest monthly saving into a seven-figure balance.
The growth formula
Future value ≈ B0 × (1 + r)^n + C × [((1 + r)^n − 1) ÷ r] B0 = current balance C = total annual contribution (you + employer) r = expected annual return n = years until retirement
The first term grows your existing savings; the second is the future value of a stream of yearly contributions. Because returns compound, money invested early does far more work than money invested late.
Why the employer match is free money
- Say you earn $80,000 and your employer matches 50% of contributions up to 6% of pay.
- Contributing 6% = $4,800/year. The employer adds 50% of that = $2,400/year.
- That $2,400 is an instant 50% return before markets do anything — no investment matches it.
- Over 30 years at 7%, that annual $2,400 match alone grows to roughly $240,000.
- Contributing less than 6% here leaves part of the match — and that six-figure future sum — on the table.
Contributions, limits and compounding
Contribution limits
The IRS caps how much you can defer into a 401(k) each year, and the limit is indexed to inflation, so it rises most years. For 2025 the employee deferral limit is $23,500, with an additional catch-up of $7,500 for those age 50 and older. Employer contributions do not count against your personal deferral limit but do count toward a higher overall cap. Always check the current year's figure, as these numbers change annually.
Traditional vs Roth 401(k)
- Traditional: contributions are pre-tax, lowering today's taxable income; withdrawals in retirement are taxed.
- Roth: contributions are after-tax, but qualified withdrawals — including all growth — are tax-free.
- Roth tends to win if you expect a higher tax rate later; traditional if you expect a lower one.
- Many savers split contributions across both to hedge future tax uncertainty.
Steering toward your number
- Enter your current balance, salary and contribution percentage.
- Add the employer match formula exactly as your plan states it (e.g., 50% up to 6%).
- Use a realistic long-run return — many planners model 6–7% for a diversified portfolio.
- Set years to retirement, then test raising your contribution by one or two percentage points.
- Watch how starting even a few years earlier changes the final balance more than saving more later.
Frequently asked questions
Glossary
- 401(k)
- An employer-sponsored, tax-advantaged retirement savings account funded by payroll contributions.
- Employer match
- Money the employer adds based on your contributions, up to a plan limit — effectively free retirement savings.
- Compounding
- Earning returns on both your contributions and previously earned returns, accelerating growth over time.
- Deferral limit
- The IRS cap on how much you can personally contribute to a 401(k) each year, indexed to inflation.
- Catch-up contribution
- An extra amount those age 50 and older may contribute above the standard limit.
- Vesting
- The timeline over which employer contributions become fully owned by you.
- Roth 401(k)
- A 401(k) funded with after-tax dollars where qualified withdrawals, including growth, are tax-free.
Key takeaways
A 401(k) grows from three forces: your contributions, the employer match, and decades of compounding.
Always contribute at least enough to capture the full match — it is a guaranteed return nothing else beats.
Save early, keep fees low, and escalate contributions with raises; starting sooner beats saving more later.
Enter your balance, contribution rate and employer match above to project your retirement balance — then try raising your contribution by 1% to see the difference.