Most people contribute to their 401k without really understanding what it will be worth at retirement. The numbers are counterintuitive — an extra 1-2% of salary, compounded over 30+ years, can mean hundreds of thousands of dollars. Use our 401k calculator to see the real impact of different choices.
The Employer Match — Free Money You Can’t Afford to Miss
If your employer offers a match and you don’t contribute at least enough to capture 100% of it, you’re declining part of your compensation. A 3% employer match on a $65,000 salary is $1,950/year in free money. Over 30 years at 7% return, that $1,950/year match (without any of your own contributions) grows to approximately $185,000.
The Impact of Starting Early
| Start Age | Monthly Contribution | Balance at 65 (7% return) |
|---|---|---|
| 25 | $300/month | ~$910,000 |
| 35 | $300/month | ~$436,000 |
| 45 | $300/month | ~$189,000 |
| 35 | $600/month | ~$872,000 |
The 35-year-old doubling contributions to catch up to the 25-year-old still falls slightly short — despite contributing twice as much monthly. Time in the market is worth more than timing the market or increasing contributions later.
The 15% Rule
Most financial planners recommend saving 15% of gross income for retirement, including employer match. If your employer matches 3%, you contribute 12%. If you’re starting later (35+), aim for 20-25% to compensate for lost compounding years.
Contribution Limits (2024)
- Standard 401k limit: $23,000
- Catch-up contribution (age 50+): additional $7,500 = $30,500 total
- IRA limit: $7,000 ($8,000 if 50+)
- Combined 401k + IRA maximum: $30,000 ($38,500 if 50+)
Retirement Planning Spreadsheet
Track your retirement accounts, project future values, and see how close you are to your retirement number — all with automatic calculations.
Traditional: contributions reduce taxable income now (better if you’re in a high bracket now and expect lower income in retirement). Roth: contributions are after-tax but grow and withdraw tax-free (better if you’re in a lower bracket now and expect higher income in retirement, or if you want tax diversification). Many advisors recommend splitting between both.
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