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401(k) Growth Calculator: How Much Could Your 401(k) Be Worth?

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What Is a 401(k)?

A 401(k) is a specific type of retirement plan only offered to employees through an employer; you cannot establish a 401(k) on your own like you can an individual retirement account (IRA). A 401(k) allows you to put aside pre-tax dollars — up to a certain limit set by the Internal Revenue Service (IRS) — into a retirement account whose investments (usually mutual funds) are determined by your employer and often management by a third-party investment company. Unlike an IRA, you have fewer investment choices with a 401(k) because your employer manages what specific investments are offered to you. Because a 401(k) allows your investment income to accumulate tax-deferred and affords you specific tax benefits with the IRS, it is classified as a qualified retirement plan. With a 401(k), your employer also may offer you matching contributions — maxing out at a certain percentage of your annual 401(k) contribution — as a part of your benefits package. These matching contributions, if made available to you, are “free money” from your employer — a benefit worth taking full advantage of to help maximize the growth of your retirement savings.

Once you retire from your employer, you become fully responsible for the funds from your 401(k) account. And if you transfer to another job, you may choose to roll over your 401(k) into an IRA or to your new employer. Learn more about the differences between a 401(k) retirement plan and an IRA.

How Much Can You Contribute to a 401(k)?

Each tax year the IRS establishes its 401(k) contribution limits. Two annual limits apply to these contributions: (1) a limit on your employee elective salary deferrals (contributions you make to your 401(k) plan in lieu of receiving this money as salary) and (2) an overall limit on contributions to your 401(k), including employer matching contributions. Deferral limits for 401(k) plans are $22,500 in 2023; for those age 50 or over who are making catch-up contributions, the limits are $30,000 in 2023 (an additional $7,500 allowed). Furthermore, employer matching contributions paid into an eligible employee’s 401(k) cannot exceed the lesser of 100% of the employee’s compensation or $66,000 ($73,500 including catch-up contributions) for 2023. 

How Does a 401(k) Grow? 

The growth of your 401(k) largely depends on the amount of money you contribute to your account each year as an employee and the matching contributions that your employer adds to your account over time. The more money you and your employer contribute to your 401(k), the more potential it has to grow. The other important factor influencing how quickly you accumulate money in your 401(k) retirement account is the growth of your investments, which depends on your annual rate of return.  Because your employer or a third-party investment firm hired by your employer manages the investments in your 401(k), you have less choice and control over how the funds in your 401(k) account are invested compared to an IRA. Consequently, you don’t have the same amount of flexibility with a 401(k) to move money around and reallocate funds in your portfolio if you become dissatisfied with your current rate of return on your investments. To review long-term market returns for small-company stocks, large-company stocks, government bonds and U.S. Treasury bills, refer to the Ibbotson® SBBI® (stocks, bonds, bills and inflation) for 1926-2018. Understanding these historic compound annual return rates may help you gauge expectations for your 401(k). Through the power of compounding interest the retirement savings you and your employer deposit into your 401(k) account may grow into a sizeable sum. Keep in mind that investments in a 401(k) are subject to market risk, including the potential to lose the entire principal amount invested.

What Could Your 401(k) Be Worth at Retirement?

Using our 401(k) Growth Calculator, let’s run through a quick example. Let’s assume the following:

  • You are 30 years old right now.
  • You have 37 years until you retire.
  • You make $50,000/year and expect a 3% annual salary increase.
  • Your current 401(k) balance is $10,000.
  • You get paid biweekly.
  • You expect your annual before-tax rate of return on your 401(k) to be 5%.
  • Your employer match is 100% up to a maximum of 4%.
  • Your current before-tax 401(k) plan contribution is 5% per year.

Applying these figures to this calculator returns a before-tax total value of your 401(k) retirement account of $795,517 in year 37 before you retire. That’s quite an accumulation of savings over 37 years. During that period of investing in your 401(k), your cumulative contributions total $165,436, and your employer cumulative contributions add up to $132,348. This example illustrates the growth potential of investing 5% of your salary over several decades into your 401(k) while maximizing the benefit of your employer matching contributions.

How Much Could Your 401(k) Grow If You Stop Contributing?

Now let’s examine what happens to your 401(k) when you stop contributing and your employer does not make any matching contributions either. Using most of the same parameters as before, let’s use our 401(k) Growth Calculator to see how much your 401(k) will be worth if you stop contributing at age 30, after you have already accumulated $10,000 in your account: 

  • You are 30 years old right now.
  • You have 37 years until you retire.
  • You make $50,000/year and expect a 3% annual salary increase.
  • Your current 401(k) balance is $10,000.
  • You get paid biweekly.
  • You expect your annual before-tax rate of return on your 401(k) to be 5%.
  • Your employer match is 100% up to a maximum of 4%. (However, because you stop contributing, your employer match amount is now $0 per year.)
  • Your current before-tax 401(k) plan contribution is now 0% per year.

What happens to your previous 401(k) balance of $795,517? It plummets to $63,485  — $732,032 less than before. When you stop contributing to your 401(k) and have no employer matching contributions, your total 401(k) balance in year 37 is 92% less. 

Procrastinating with your retirement savings — and your 401(k) contributions — means you have to work much harder and save even more to catch up to where you need to be in order to reach your retirement goals. Learn more about the cost of waiting to save for your retirement.

Using This Simple 401(k) Calculator

Our 401(k) Growth Calculator is a simple and easy way to estimate the long-term growth of your 401(k) retirement account by the time you want to retire. Knowing how much your current 401(k) account may accumulate in the future can help you determine if you should adjust your annual 401(k) contributions to help reach your retirement goals. After answering a brief series of questions, you will get your results, including your estimated accumulated plan balance at retirement, total out-of-pocket costs, and a summary table and bar graph illustrating your retirement plan accumulation over time.

About Your Inputs

Our 401(k) Growth Calculator asks you to complete various fields of information about the assumptions you want to make, your 401(k) plan specifics and current annual contribution to estimate the future value of your account before retirement.

Common Assumptions

This section asks you about the assumptions you want to make about your 401(k) calculations:

  • Years until retirement – This is the total number of years between now and your actual retirement (between 1 and 50).
  • Current annual income – This is the total dollar amount of the yearly salary you receive as compensation from your employer.
  • Annual salary increases – This is the percentage you project your salary may increase each year between now and when you decide to retire. If you expect an annual raise or cost-of-living or inflation adjustment, estimate a certain percentage.

Plan Information

This section asks you about the parameters of your 401(k) retirement account:

  • Current 401(k) balance – How much money do you currently have in your 401(k) retirement account? Enter this total dollar amount here.
  • Pay period frequency – How often do you receive a paycheck? Choose a frequency of weekly (once a week), biweekly (once every two weeks), semimonthly (twice a month), monthly (once a month) or annually (once a year).
  • Annual before-tax return on savings – What annual percentage do you expect to earn on your 401(k) retirement account, before taxes? Your employer decides what investments you can choose for your 401(k) plan as well as the investment firm in charge of managing the funds. With this in mind, your employer should be able to provide you with a historical average rate of return for your 401(k) plan over a certain period of time. Remember that your 401(k) investments involve risk; therefore, past performance is no guarantee of future results. Your investment return and principal value of an investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. That’s why our 401(k) Growth Calculator allows you to enter a figure anywhere between negative 12% and positive 12%.
  • Employer match – This figure is the percentage of your annual 401(k) contribution that your employer will match and add to your 401(k) retirement account up to a preset maximum employer contribution percentage. This employer match percentage can range from 0% up to 300%. For example, let’s say your yearly salary is $50,000, and your annual contribution percentage to your 401(k) is 10%, or $5,000. If your employer match is 50%, your employer would add 50% of your contribution (0.50 x $5,000), or $2,500, to your 401(k) account, as long as this amount does not exceed your maximum employer match, which is a limiting factor explained below. 
  • Maximum employer match – This is the maximum percentage of your annual salary that your employer establishes as the upper limit for the matching contribution to your 401(k) plan. For this calculator, the maximum employer match percentage can range from 0% up to 20%. For example, if your annual 401(k) contribution is 10% of your salary of $50,000, that amount is $5,000. Then, if your employer match is 50% with a maximum employer match of 3%, then your employer would match 50% of your contribution up to 3% of your salary (0.50 x 0.03 x $50,000), for a maximum employer match amount of $750. If you decided to contribute a higher percentage like 5% of your salary (0.05 x $50,000), equal to $2,500, then your employer would still only contribute $750 because your contribution percentage exceeds the 3% maximum employer match. Likewise, if you decided to contribute only 2% (0.02 x $50,000), or $1,000, your employer match would be 50% of that amount, for a total employer match of $500.

Contribution Information

This section asks about your annual 401(k) plan contributions:

  • Current before-tax 401(k) plan contribution – This is the percentage of your salary, in pre-tax dollars, that you contribute to your 401(k) plan on an annual basis. You can select a percentage between 0 and 50%. Keep in mind, however, that the Internal Revenue Service (IRS) has established limits for your 401(k) contributions. You may contribute up to $22,500 in 2023. If you are age 50 or over at the end of the calendar year, you can also make catch-up contributions: $7,500 in 2023 for a maximum contribution of $30,000. Visit the IRS website for more information about 401(k) plan contribution limits.

About Your Results

Given your annual salary percentage of 401(k) contributions, this Simple 401(k) Estimator at Retirement provides you with quick results about your accumulated plan balance at retirement as well as your total out-of-pocket costs. A summary table of your accumulation analysis lists the percentages and starting dollar amounts for your 401(k) contribution, your employer match and your maximum employer contribution, along with totals for your cumulative contributions, employer cumulative contributions and before-tax value of your account during the final year before your retirement. In addition, a retirement plan accumulation bar graph illustrates your growing account balance over time (for the duration of years before retirement that you indicated), with different colors representing your annual contribution, your employer match and your interest growth. 

More Retirement Calculators

Explore our variety of Financial Calculators to help assess your needs and achieve your financial goals.

This information is intended to serve as a basis for your conversation with a financial representative. Calculations are based on the information you provided.

These calculators are designed to be informational and educational tools only, and do not constitute investment advice. You should consider the counsel of a financial services professional before making any type of investment or financial decision. We also encourage you to review your investment strategy periodically as your financial circumstances change. This module is hypothetical and is provided for illustration purposes only. It is not indicative of the performance of any specific investment product or strategy. The members of Western &  Southern Financial Group, Inc. (WSFG) are not responsible for the consequences of any decisions or actions taken in reliance upon or as a result of the information provided by these tools.  Furthermore, WSFG is not responsible for any human or mechanical errors or omissions. Securities contain risk and will fluctuate with changes in market conditions.

Securities offered by Registered Representatives through W&S Brokerage Services, Inc., member FINRA/SIPC. All companies are members of Western and Southern Financial Group.