401(k) Calculator

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

At minimum, enough to capture the full employer match — that's an instant 50%-100% return. The common overall guideline is 10%-15% of salary toward retirement including the match. The 2025 employee contribution limit is $23,500 ($31,000 with age-50+ catch-up).

Q: How does a typical employer match work?

A common formula is 50% of your contributions up to 6% of salary — worth up to 3% of pay. On an $80,000 salary that's $2,400 of free money per year, which compounds to six figures over a career.

Q: Traditional or Roth 401(k)?

Traditional contributions cut taxes now and are taxed at withdrawal; Roth contributions are taxed now and withdrawn tax-free. Roth generally favors those expecting higher future tax rates (often younger or lower-bracket savers); traditional favors peak earners. Splitting between both hedges the bet.

Q: What happens if I cash out my 401(k) early?

Early withdrawals are typically subject to ordinary income tax plus a 10% penalty if taken before age 59 and a half, and permanently forfeit all future compounding on that money. Rolling the balance into a new employer plan or an IRA avoids both the taxes and the lost growth.

Q: Do fund fees inside my 401(k) really matter?

Yes. Fees compound against a balance the same way returns compound in its favor, so the difference between a 1% and a 0.1% expense ratio can total tens of thousands of dollars over a multi-decade career.

Project your balance at retirement — with the employer match counted separately, so you can see exactly what that free money compounds into.

Written by the Calculator Index team · 2025 IRS contribution limits: $23,500 ($31,000 age 50+) · Last reviewed August 2026

Projected balance at 67

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Your contributions

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Employer match (free money)

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Investment growth

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Match's share of final balance

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How the match math works

Match = min(Your %, Match cap %) × Match rate × Salary

With a 50%-up-to-6% formula, contributing 6%+ of salary earns the full 3%-of-salary match. Contributing less than the cap leaves guaranteed money on the table — no investment on earth reliably beats an instant 50% return.

Worked example

Age 30 → 67 · $80,000 salary growing 3%/yr · you contribute 10% · employer matches 50% up to 6% · 6.5% returns · $25,000 start

Projected balance: ≈ $1.5M. The employer match alone contributes about $150,000 of deposits that compound to roughly $330,000 of the final balance.

Getting the most from your 401(k)

Priority order used by most planners: contribute to the full match first (instant return), then max an HSA or Roth IRA if eligible (better investment menus, more flexibility), then raise 401(k) contributions toward the annual limit ($23,500 for 2025; +$7,500 catch-up at 50). Watch fund fees inside the plan — a 1% expense ratio quietly consumes roughly a quarter of a career's growth versus a 0.1% index fund. And when changing jobs, roll the balance over rather than cashing out: a $25,000 cash-out at 30 costs taxes and penalties now, and about $250,000 of retirement money later. See where the balance fits in your overall plan with the retirement calculator.

Common mistakes with 401(k) contributions

Contributing less than the full match. Leaving match money on the table means turning down a guaranteed 50–100% instant return — no investment reliably matches that, so this should always be funded first regardless of other financial goals.
Cashing out at a job change. An early cash-out triggers income tax plus a 10% penalty before age 59½, and permanently removes decades of potential compounding — rolling the balance into a new employer's plan or an IRA avoids both costs.
Ignoring fund expense ratios. A 1% expense ratio versus a 0.1% index fund option can consume roughly a quarter of a career's growth — check your plan's fund menu for lower-cost index options.
Not increasing contributions with raises. Contribution percentages often stay flat for years even as salary grows — an annual "contribution bump" of even 1% compounds meaningfully by retirement.

Frequently asked questions

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

At least the full match; 10–15% of salary overall. 2025 limit: $23,500 ($31,000 at 50+).

How does a typical employer match work?

Commonly 50% of contributions up to 6% of salary — worth 3% of pay, ~$2,400/yr on $80,000.

Traditional or Roth 401(k)?

Traditional = tax break now; Roth = tax-free later. Roth favors lower current brackets; many split both.

What happens if I cash out my 401(k) early?

You'll typically owe income tax on the withdrawal plus a 10% early-withdrawal penalty if you're under 59½, and you lose all future compounding on that money — a rollover to a new plan or IRA avoids both costs.

Do fund fees inside my 401(k) really matter?

Yes, significantly. Fees compound against your balance the same way returns compound for it — over a multi-decade career, the difference between a 1% and a 0.1% expense ratio can total tens of thousands of dollars.

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Note: Assumes contribution limits are not binding and constant return/growth rates; IRS limits change annually. Not financial or tax advice. Contribution limits: 2025 tax year. Last reviewed: July 2026.