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401k Contribution Definition
Use this contribution calculator to help you determine how much you will have saved in your 401(k) fund when you retire.
Definition of a 401(k) Account
A 401(k) is an employer-sponsored retirement plan that allows you to relegate a percentage of your paycheck into future retirement savings.
There are several benefits to a 401(k) account:
First of all, it forces you to save money for the future by keeping a portion separate from the rest of your paycheck; people are less likely to put money aside for future savings regularly if they have it available to spend.
Second, money is taken out of your paycheck with pre-tax dollars; taxes are not paid on your 401(k) funds until you withdraw money out. Since the funds provide a rate of return over time, pre-tax dollars will grow more quickly. Third, your employer typically matches your contributions to your 401(k) up to a certain percentage, causing your money to grow more quickly.
Finally, you can control how the money in your 401(k) gets invested; the plans for a 401(k) typically involve a mix of stocks, bonds and money market funds. You can choose to make your plan more aggressive or conservative, depending on your risk tolerance.
Using the Calculator to Estimate Your Future Earnings
With this 401(k) contribution calculator, you can estimate what you will have saved in your fund when you plan to retire. To use the calculator, enter several parameters into the available fields:
401(k) contribution percentage
Employer match percentage
Estimated percent rate of return
Years until you plan to retire
After entering these parameters into the fields, click on the Calculate button. The calculator will take these parameters and tell you how much you will have in the fund at the time of your retirement.
If you find the total amount to be unacceptable, then you can go back by pressing the Back button on the calculator and revise your figures. Play with the parameters to help you determine how to save more for retirement. For example, you have these options to modify and see how they affect your totals:
Increasing your 401(k) percentage contribution
Increasing your employer’s percentage contribution, if your employer will match a higher amount
Increasing the number of years until you retire
Determine how a different rate of return than expected would affect retirement savings
If, after using the calculator, you find that changing contribution percentages and years until retirement do not give you a significant enough retirement savings, then you may want to consider looking for a different position that offers you a higher salary, allowing you to save more for the future.
How to Calculate 401k Contribution
Let's be honest - sometimes the best 401k contribution calculator is the one that is easy to use and doesn't require us to even know what the 401k contribution formula is in the first place! But if you want to know the exact formula for calculating 401k contribution then please check out the "Formula" box above.
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You can get a free online 401k contribution calculator for your website and you don't even have to download the 401k contribution calculator - you can just copy and paste! The 401k contribution calculator exactly as you see it above is 100% free for you to use. If you want to customize the colors, size, and more to better fit your site, then pricing starts at just $29.99 for a one time purchase. Click the "Customize" button above to learn more!