A 401(k) is the most powerful retirement tool most workers have access to, combining tax advantages with free employer money. This calculator shows how your contributions, your employer match, and decades of compound growth build into a retirement balance.
How contributions and matching work
You choose a percentage of each paycheck to contribute, and many employers match a portion — a typical formula is 50% of your contributions up to 6% of salary. On a $60,000 salary, contributing 6% ($3,600) earns you an extra $1,800 from your employer every year. That match is an immediate, guaranteed return you cannot get anywhere else.
2025 contribution limits
For 2025 you can contribute up to $23,500 of your own money, and if you are 50 or older you can add a $7,500 catch-up contribution for a total of $31,000. Employer matching contributions do not count against these limits, so your total account additions can be considerably higher.
A worked example
Contributing $500 a month with a $250 monthly employer match — $750 total — at a 7% return over 30 years grows to roughly $850,000. Without the match, the same personal contribution reaches about $565,000. The match alone accounts for nearly $285,000 of the difference.
Getting the most from your 401(k)
- Always contribute at least enough to capture the full employer match before investing elsewhere.
- Choose low-cost index funds if available; expense ratios directly reduce your long-term balance.
- Consider a Roth 401(k) if your employer offers it and you expect higher taxes in retirement.
- Avoid cashing out when you change jobs — roll the balance into a new 401(k) or IRA to keep it growing tax-deferred.