The 401(k) Calculator can estimate a 401(k) balance at retirement as well as distributions in retirement based on income, contribution percentage, age, salary increase, and investment return. It is mainly intended for use by U.S. residents.
To get the most out of this 401(k) calculator, we recommend that you input data that reflects your retirement goals and current financial situation. If you don’t have data ready to go, we offer default numbers based on the finances of the average American.
- Contribution percentage: 10%. Retirement experts suggest that you contribute at least 10% of your salary to your 401(k) account, but even this may not be enough for a secure retirement. Fidelity Investments recommends that you should be saving at least 15% of your pre-tax salary for retirement.
- Employer Match: 5%. Many employers choose to match you 401(k) contributions up to certain limits. That means your employer also contributes money to your 401(k) account as a job benefit. According to Fidelity, the average employer match is 4.6%. They may get to that percentage using a dollar-for-dollar contribution or a custom formula that might, for example, match 50% of your contribution amount up to 6% of your total annual salary.
- Annual Salary (pre-tax): $31,000. While your annual salary may be higher or lower, $31,000 is the median income in the U.S. This is a critical piece of information for your 401(k) plan because it’s a benchmark for determining how much you can afford to contribute.
- Annual Salary Increase: 3%. The Social Security Administration estimates that average incomes have risen by this amount each year over the past decade. Your salary may increase more or less than this average, but it’s generally safe to assume your income will keep up with inflation, which historically has grown at a rate of about 2% per year.
- Retirement Age: 66. According to research from Transamerica, this is the median age at which Americans retire.
- Current 401(k) Balance: $0. Hopefully you have more than this saved for retirement already, but for the purposes of this calculator, we set our default to represent someone starting from scratch.
- Annual Rate of Return: 9%. The securities you choose to buy with your retirement savings determine the rate of return on your investments, not to mention the overall performance of the stock market. We’ve assumed that your investments will return an average 9% before you retire, reflecting historical long-term averages of stock portfolios.
