401(k) Savings Calculator
A 401(k) can be one of your best tools for creating a secure retirement. It provides you with two important advantages. First, all contributions and earnings to your 401(k) are tax deferred. You only pay taxes on contributions and earnings when the money is withdrawn. Second, many employers provide matching contributions to your 401(k) account which can range from 0% to 100% of your contributions. The combined result is a retirement savings plan you cannot afford to pass up.
Use this calculator to estimate the impact of starting a 401(k) and call our offices to discuss other aspects of your financial situation.
|| The starting balance or current amount you have invested or saved in your 401(k).
|| This is your annual salary from your employer before taxes and other benefit deductions. Since your contribution and company match are based on the salary paid to you by your employer, do not include any income you may receive from sources other than your employer.
|Years to invest
|| The total number of years you are planning to save or invest in your 401(k).
|Annual rate of return
|| The annual rate of return for your 401(k) account. Historically the major stock indexes have averaged 11% to 12% per year. If you plan on withdrawing your money within five years, you may wish to choose a more conservative rate of return. This calculator assumes that your return is compounded annually and your deposits are made monthly.
|Percent to contribute
|| This is the percentage of your annual salary you contribute to your 401(k) plan each year. Most employers permit employees to contribute up to 15 percent of their salary to a 401(k).
|| This is your total contribution for one year based on your annual salary times the percent you contribute. Your annual contribution is also subject to certain maximum total contributions per year. The annual maximum for 2001 is unchanged from 2000 remaining at $10,500. Although the maximum did not change for 2001, the annual maximum can be subject to an adjustment for inflation each year. It is important to note that some employees are subject to another form of contribution limitations. During 2001 employees that are classified as "Highly Compensated" may be subject to contribution limits based on their employer's overall 401(k) participation. If you expect your salary to be above $85,000 in 2001 you may need to contact your employer to see if these additional contribution limits apply to you.
|| An employer match is in addition to your annual contributions. It is based on a percentage of your annual contributions. This range can be anywhere from 0% to 100%. An employer match is usually only for a limited portion of your salary. Please read the definition for "Employer maximum" for a detailed description.
|| This is the maximum percent of your salary matched by your employer regardless of the amount you decide to contribute. For example, lets assume your employer has a 50% match up to a maximum of 6% of your annual salary. If you have an annual salary of $25,000 and contribute 6%, your annual contribution is $1500. With a 50% match, your employer will add another $750 to your 401(k) account. If you increase your contribution to 10% your annual contribution is $2500 per year. The employer match, however, would be limited to the first 6% of your salary and remains at $750.
Information and interactive calculators are made available to you as self-help tools for your independent use. We can not and do not guarantee their accuracy or their applicability to your circumstances. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.