How much should I contribute to my 401k?
At minimum, contribute enough to get your full employer match. Ideally, aim for 10-15% of your salary including employer match. If you can afford more, maxing out at $24,500 (2026) provides maximum tax-advantaged growth.
Should I choose traditional or Roth 401k?
Choose Roth if you're early in your career (lower tax bracket now), expect higher income later, or want tax-free retirement income. Choose traditional if you're in peak earning years and expect lower taxes in retirement. Many people split contributions for tax diversification.
What happens to my 401k if I change jobs?
You have several options: leave it with your old employer (if allowed), roll it to your new employer's plan, or roll it to an IRA. Rolling to an IRA often provides more investment choices and lower fees. Never cash it out—you'll lose 30-40% to taxes and penalties.
Can I withdraw from my 401k before retirement?
You can, but early withdrawals (before 59½) trigger ordinary income tax plus a 10% penalty. Exceptions exist for hardship, disability, or leaving your job after age 55. Generally, avoid early withdrawals—the compound growth you lose is substantial.
What's better: 401k or IRA?
Prioritize 401k first if you have an employer match—get the free money. After that, IRAs offer more investment choices and often lower fees. Max out your employer match, then consider maxing an IRA ($7,500 in 2026), then return to your 401k.
How is employer vesting calculated?
Vesting determines how much of the employer match you keep if you leave. Common schedules are 3-year cliff (0% then 100%) or 6-year graded (20% per year). Your own contributions are always 100% vested.
What is the IRS contribution limit for a 401(k)?
For 2026, the employee elective deferral limit is $24,500 if you're under 50, and $32,500 if you're 50 or older (the base limit plus an $8,000 catch-up contribution). Workers aged 60–63 can use an enhanced SECURE 2.0 'super catch-up' of $11,250, for a total of $35,750. Employer matching is on top of this and counts toward a separate, higher combined limit ($72,000, or $80,000 with the age-50 catch-up). The limit is indexed to inflation and changes most years, so check the latest IRS announcement before tax filing.
Why does my projected balance change so much when I adjust the return rate?
Long-horizon compounding is exponential, so a small change in the rate produces a large change in the final number. Over 40 years, raising the expected return from 6% to 8% can roughly double the projected balance. That sensitivity is why conservative planning typically uses 5%–7%, leaving room for sequence-of-returns risk and inflation.
Does the calculator account for inflation?
No — the projected balance is in nominal (future) dollars, not today's dollars. To see the inflation-adjusted figure, subtract your inflation assumption from the expected return (for example, use 4% instead of 7% to reflect a 3% inflation assumption). The 4% safe-withdrawal estimate is also a nominal figure that you'll want to adjust over time.
Are employer matching contributions counted against my $24,500 limit?
No. The $24,500 (or $32,500 with catch-up) limit applies only to your own elective deferrals. Employer matches count toward a separate combined contribution limit ($72,000 for under 50, $80,000 for 50+), so the match never crowds out your own contributions.
What is the 4% rule used for monthly retirement income?
It's a long-standing rule of thumb from the Trinity Study suggesting that withdrawing 4% of your portfolio in year one of retirement (then adjusting for inflation) has historically given a high probability of lasting 30 years. The calculator multiplies your projected balance by 4% and divides by 12 to estimate monthly income. It's a planning anchor, not a guarantee.
Should I prioritize paying off debt or contributing to my 401(k)?
Capture the full employer match first — a 50% match is an instant 50% return that almost no debt costs you. After that, compare your debt's interest rate to your expected investment return. Generally, pay off debt above ~7% before adding more to the 401(k); below that, splitting between debt and additional retirement savings usually wins long-term.
