# 401K Calculator – See How Much Will You Have For Retirement

October 25th, 2012 by David WaringOur **401K Calculator** estimates what the value of 401K plan with be when you retire based on your contribution level and rate of return. There is a full explanation of each of the inputs below the calculator, and you can feel free to leave any questions in the comments section below.

### How do you use the 401K Calculator?

You’ll need to put in the following information:

**Salary:** Enter your current salary into the 401K calculator, but don’t put in any commas. For example, for fifty thousand dollars, enter 50000. Even if your salary is likely to increase in the future, put your current salary in for the moment to get a conservative estimate.

**401k Contribution (%):** In 2011, the maximum amount of your salary that you can contribute is $17,000. You need to enter a percentage into the 401K calculator, not a figure, so to find the maximum percentage you can contribute, divide $17,000 by your salary. In our example of a salary of $50,000, that would give a maximum percentage of 34%. In general, the more you can contribute to your 401k, the better.

**Employer Match (%):** Some companies also contribute in proportion to their employees’ own contribution to encourage retirement savings. A typical employer contribution is 3-5%.

**Estimated Rate Of Return:** As the name indicates, this is an estimate. What you enter into the 401K calculator will depend on the investments that are made for you within your 401k. Investments in stocks over twenty years have shown a rate of around 7% in the past. Fixed income products would perhaps be at 6%. To calculate for a shorter period and given current market conditions, you might use a lower estimate of 3-5%.

**Years Until Retirement:** When do you plan to retire? Many people choose somewhere between the ages of 62 and 67. If in doubt, subtract your current age from 65 to get an estimate of your years till retirement, and put the result into this section of the 401K calculator.

Estimated Value. When you’ve entered in the data above and clicked on “Calculate”, the calculator will then display the estimated value of your 401k.

### What are the limitations of the 401k Calculator?

The calculator does not take account of the current value of your 401k plan. It also assumes that your salary will not change, that you will continue to be employed for the whole period between now and retirement, and that your employers will continue the same level of matching. And while the result from the calculator may appear big, it’s not adjusted for inflation. Its real buying power by the time you get to retirement is likely to be significantly smaller.