401(k) & Pension Calculator
The employer match is the part worth getting right. It is an immediate return on the money you contribute, before any growth at all, and nothing else in personal finance pays that.
At retirement
$1,043,454.75
- You pay in
- $375.00 a month
- Employer adds
- $187.50 a month
- Your contributions
- $182,556.36
- Employer contributions
- $91,278.18
- Growth
- $744,620.22
- Starting balance grows to
- $202,912.44
- The employer match is $187.50 a month you would not otherwise have — an immediate return of 50% on the part they match, before any growth. Nothing else in personal finance pays that.
- Matched money is often subject to a vesting schedule, so leaving early can mean leaving some of it behind. Your own contributions are always yours.
- Contribution limits apply and change from year to year. They are not modelled here, because a figure that expires annually is a figure that goes stale.
About the retirement account calculator
A workplace match is usually expressed as a share of what you put in, up to a cap set as a percentage of salary. A common arrangement is fifty per cent of your contributions up to six per cent of pay: contribute six per cent and the employer adds three. On a $75,000 salary that is $375 a month from you and $187.50 from them.
Contributing less than the cap leaves part of that on the table, and it is the one situation in personal finance with an unambiguous answer. A fifty per cent match is an instant fifty per cent return on the matched portion — no investment, no debt repayment and no tax arrangement comes close.
The pay rise assumption matters more than it looks. Contributing a fixed percentage of a salary that rises two per cent a year means the contribution rises with it, and those increases arrive early enough to compound. On these figures the account reaches about $1.04 million over thirty years, of which roughly $745,000 is growth.
Matched money often comes with a vesting schedule, so leaving before you are fully vested can mean leaving some of it behind. Your own contributions are always yours. Contribution limits also apply and change every year, which is why they are not modelled here — a figure that expires annually is a figure that goes stale.
What it works out
- Your contributions and the employer match, separately
- An annual pay rise carrying the contribution up with it
- Any balance you already have
- Whether you are capturing the whole match
The formula
Monthly in = (Salary × Your %) ÷ 12 + (Salary × min(Your %, Cap) × Match %) ÷ 12
Your contribution is a straight percentage of salary. The employer's is a percentage of your contribution, but only on the part of it that falls within their cap — which is the detail that decides whether you are leaving money behind.
At 6% of $75,000 you put in $375 a month. The employer matches 50% of the first 6% of salary, so they add $187.50. Contribute 4% instead and you put in $250 and they add $125 — you have given up $62.50 a month of free money. Contribute 10% and you put in $625 while they still add $187.50, because the match stopped at 6%.
Both then compound together for the whole period, with the contribution rising each year in line with pay.
On these figures the account reaches about $1.04 million. Your own contributions come to roughly $183,000 and the employer's to $91,000, so about $745,000 of the total is growth. That ratio is the argument for starting early rather than contributing more later.
- Your %
- The share of salary you contribute.
- Match %
- What the employer adds, as a share of your contribution.
- Cap
- The share of salary the match applies to. Contributions past it are unmatched.
- Pay rise
- An annual increase, which carries the contribution up with it.
A worked example
A $75,000 salary, contributing 6% with the employer matching half up to 6%, starting from $25,000, over thirty years at 7% with 2% annual rises.
That works out to $1,043,454.75 .
- You pay in
- $375.00 a month
- Employer adds
- $187.50 a month
- Your contributions
- $182,556.36
- Employer contributions
- $91,278.18
- Growth
- $744,620.22
- Starting balance grows to
- $202,912.44
Questions
How does an employer match work?
The employer adds a share of what you contribute, up to a cap set as a percentage of your salary. Fifty per cent up to six per cent of pay means contributing six per cent gets you three per cent extra from them.
How much should I contribute?
At least enough to get the whole match, always. Beyond that it is a normal trade-off against other uses of the money — but the matched portion is not a trade-off, it is a fifty per cent return for doing nothing.
What happens if I contribute more than the match cap?
You get no extra match on the excess, but the money still goes in and still grows, usually with a tax advantage. It is a good thing to do, just not an exceptional one the way the matched portion is.
What is vesting?
A schedule that decides when the employer's contributions actually become yours — often over three to five years. Leave before you are fully vested and you forfeit the unvested part. Your own contributions are yours from day one.
What return should I assume?
Something you would defend if it proved optimistic. Long-run diversified returns are commonly modelled at six to eight per cent nominal, and a plan that only works at the top of that range is fragile. Try it two points lower.
Does this include contribution limits?
No. Annual limits apply and change every year, so publishing one here would mean a page that goes stale on a fixed schedule. Check the current limit and cap your contribution accordingly.
Is the final figure in today's money?
No — it is nominal. At three per cent inflation over thirty years, a million buys roughly what $412,000 buys today. Use a return net of inflation if you want the answer in today's terms.
Should I pay off debt or contribute first?
Get the full match first, whatever the debt — nothing charges more than a fifty per cent instant return. After that, clear high-rate debt before contributing beyond the match, since no expected return beats a card rate reliably.