How to Use This Retirement Calculator
Our comprehensive retirement calculator helps you determine if you're saving enough for retirement by projecting your 401(k) balance from your current age through age 100. Simply enter your current financial information including your age, salary, contribution percentages, and retirement goals. The calculator performs month-by-month calculations with annual adjustments for salary increases, inflation, and IRS limit changes.
The calculator accounts for all major factors affecting your retirement savings: employee contributions, employer matching, catch-up contributions for those 50 and older, investment returns before and after retirement, Required Minimum Distributions (RMDs) starting at age 73, and inflation adjustments. You'll receive a detailed projection showing your estimated balance at retirement and whether your savings will last through age 100.
Understanding Your 401(k) and Retirement Savings
A 401(k) is a tax-advantaged retirement savings plan offered by many employers. Your contributions are typically made pre-tax, reducing your current taxable income while allowing your investments to grow tax-deferred until withdrawal. Many employers offer matching contributions, which is essentially free money toward your retirement - always contribute enough to get the full employer match.
For 2025, the IRS allows employees to contribute up to $23,500 to their 401(k). If you're 50 or older, you can make additional catch-up contributions of up to $7,500, bringing your total potential contribution to $31,000. The total contribution limit (employee + employer) is $70,000 for 2025. Our calculator automatically applies these limits and projects their annual increases based on historical IRS adjustments.
What is Required Minimum Distribution (RMD)?
Required Minimum Distributions (RMDs) are mandatory withdrawals from retirement accounts that begin at age 73 under current IRS rules. The purpose of RMDs is to ensure that tax-advantaged retirement savings are eventually withdrawn and taxed. The amount you must withdraw each year is calculated by dividing your account balance by a life expectancy factor published by the IRS in the Uniform Lifetime Table.
Our retirement calculator automatically calculates your RMDs starting at age 73 using the current IRS life expectancy tables. If your desired retirement income is less than the RMD requirement, the calculator will use the higher RMD amount for your withdrawals, ensuring compliance with IRS regulations. Failing to take RMDs can result in a penalty of 25% of the amount that should have been withdrawn.
Investment Returns and Inflation
Investment returns are a critical factor in retirement planning. Historical stock market returns have averaged around 10% annually, while more conservative portfolios might return 6-8%. Our calculator allows you to set different expected returns for your working years (typically higher with more stock exposure) and retirement years (typically lower with more conservative allocations).
The calculator uses a sophisticated monthly compounding formula: Monthly Rate = (1 + Annual Rate)^(1/12) - 1. This provides accurate growth projections rather than simple division. Inflation is another crucial factor - historically averaging 2-3% annually. The calculator adjusts your desired retirement income for inflation each year, showing you the actual dollar amount you'll need to maintain your purchasing power throughout retirement.
Frequently Asked Questions
How much should I save for retirement?
Financial experts typically recommend saving 10-15% of your gross income for retirement. If you're starting late or want to retire early, you may need to save 15-20% or more. A good rule of thumb is to aim for 10-12 times your final salary saved by retirement age. Our calculator helps you see if you're on track by projecting your actual savings based on your current contribution rate.
What are catch-up contributions and when can I make them?
Catch-up contributions are additional amounts that individuals age 50 and older can contribute to their 401(k) plans beyond the standard annual limit. For 2025, this is an extra $7,500 per year. These contributions help people who started saving late or want to maximize their retirement savings in their final working years. Our calculator automatically includes catch-up contributions when you reach age 50.
Should I contribute enough to get my employer match?
Absolutely! Employer matching contributions are essentially free money and provide an immediate 100% return on your investment. For example, if your employer matches 50% of your contributions up to 6% of salary, you should contribute at least 6% to get the full match. Not taking advantage of employer matching is like leaving part of your salary on the table.
What happens if my money runs out before age 100?
If the calculator shows your funds depleting before age 100, you have several options: increase your contribution rate, work longer before retiring, reduce your planned retirement spending, or adjust your investment strategy for higher returns (with correspondingly higher risk). The calculator shows you exactly when your funds might run out, helping you make informed adjustments to your retirement plan.
How accurate are retirement calculators?
Retirement calculators provide estimates based on assumptions about investment returns, inflation, salary growth, and other variables. Actual results will vary based on market performance, life circumstances, and changing tax laws. Use the calculator as a planning tool and review your progress annually. Consider consulting with a financial advisor for personalized advice, especially as you near retirement.
What is the difference between traditional and Roth 401(k)?
Traditional 401(k) contributions are made pre-tax, reducing your current taxable income, but withdrawals in retirement are taxed as ordinary income. Roth 401(k) contributions are made after-tax, providing no immediate tax benefit, but qualified withdrawals in retirement are tax-free. This calculator works for either type, though the after-tax value of your retirement funds will differ. Roth accounts are not subject to RMDs during the account owner's lifetime.
Retirement Planning Tips
- Start early: Time is your greatest asset due to compound interest. Even small contributions in your 20s can grow substantially over 40 years.
- Maximize employer match: Always contribute enough to receive your full employer match - it's an immediate return on investment.
- Increase contributions with raises: When you receive a salary increase, boost your 401(k) contribution percentage to accelerate savings.
- Diversify investments: Don't put all your eggs in one basket. Diversify across stocks, bonds, and other asset classes appropriate for your age and risk tolerance.
- Rebalance annually: Review and rebalance your portfolio at least once per year to maintain your target asset allocation.
- Plan for healthcare: Healthcare is often one of the largest retirement expenses. Consider Health Savings Accounts (HSAs) and understand Medicare options.
- Consider part-time work: Even a few years of part-time work in early retirement can significantly extend how long your savings last.
- Review regularly: Run this calculator annually or whenever your circumstances change to ensure you stay on track.
About This Calculator
This retirement calculator uses sophisticated financial modeling to project your 401(k) balance through retirement. It performs monthly calculations with annual adjustments for IRS limits, salary increases, and inflation. The calculator incorporates current 2025 IRS regulations including contribution limits ($23,500 employee + $7,500 catch-up), total contribution limits ($70,000), eligible salary limits ($350,000), and Required Minimum Distribution rules starting at age 73.
All calculations use the precise compound interest formula for monthly investment returns and include detailed tracking of employee contributions, employer matching, catch-up contributions, investment growth, RMDs, and withdrawals. The tool provides both a high-level summary with interactive charts and detailed year-by-year breakdowns that can be printed for your records or to share with financial advisors.