401(k) Retirement Calculator

The match is the first priority, ahead of everything

A typical employer match of 50 percent on the first 6 percent of salary is an immediate 50 percent return on that contribution, before any market performance. No investment available anywhere matches that. Contributing less than the full match amount leaves money that was part of your compensation package unclaimed, and it is the single most common avoidable mistake in retirement saving.

Vesting decides whether the match is yours

Employer contributions frequently vest on a schedule — cliff vesting hands over everything at once after a set period, typically three years, while graded vesting releases a percentage each year. Leaving before vesting completes forfeits the unvested portion. Your own contributions are always immediately yours. Checking the schedule before resigning is worth doing if the date is close.

Traditional or Roth is a bet on future tax rates

Traditional contributions reduce taxable income now and are taxed on withdrawal. Roth contributions are taxed now and withdraw tax-free. Traditional wins if your rate in retirement is lower than today; Roth wins if it is higher. Younger savers early in a career often expect the latter, which is why Roth is commonly recommended to them, but nobody knows future legislation and splitting between both hedges the question rather than answering it.

Fees compound against you exactly as returns compound for you

A 1 percent annual expense ratio does not cost 1 percent. Over 35 years it can consume roughly a quarter of the final balance, because the fee is taken every year on a growing balance and the money removed never compounds again. Comparing a plan's fund options by expense ratio is a higher-value hour than almost any other retirement decision.

The contribution limits move each year

Annual employee contribution limits are set by statute and adjusted for inflation, with an additional catch-up allowance from age 50. Employer contributions sit under a separate, larger combined cap. The figures change annually, so a projection built on last year's limit understates what is possible.

Early withdrawal is expensive by design

Taking money before the qualifying age generally triggers income tax plus a 10 percent penalty, and the larger cost is the compounding permanently lost. A loan against the balance avoids the penalty but is usually repayable in full shortly after leaving the employer, which converts a job change into an immediate tax event.