How to Use a 401k Calculator

How to Use a 401k Calculator. A 401k calculator is a tool you can use to see how large your investment savings will grow by the time you reach the standard age of 59 1/2. It's an easy way to make the task of planning your long-term finances simpler and more reliable.

Find out the current balance of your 401k account.

Note your current annual salary, before taxes. If you're paid hourly, assume a 40-hour work week without overtime, spread over 48 to 52 weeks (allowing 2 to 4 weeks of unpaid vacation time).

Estimate the amount your salary will increase each year, percentage-wise. Some employers give automatic, predetermined raises to employees who remain there for an extended period. Otherwise, just use the current rate of inflation to make your best guess.

Learn what percentage of your salary is automatically withheld by your employer for contribution towards your 401k account. You'll also need to know if the automatic deduction/contribution is made weekly, bi-weekly, monthly, quarterly, semi-annually or annually.

Review the terms under which your employer will match your contributions, or make bonus contributions. Frequently, companies will pledge to add a certain percentage (usually 50 percent but sometimes 100 percent) of your automatic pay deduction to the 401k account on your behalf. Again, you'll need to know if your employer contributes weekly, bi-weekly, monthly, quarterly, semi-annually or annually to your 401k.

Estimate the amount of time you'll continue to work. Your best bet is to subtract your current age from 59 1/2, which is the age at which you're allowed to access your 401k money with no penalty.

Find out the annual rate of interest at which the money in your 401k account grows. You'll also want to clarify whether interest is paid on a daily, monthly or quarterly basis.

Use a 401k calculator, readily available online, entering the information you gathered into the indicated fields. When all information has been entered correctly, click on the "Calculate" button (or whatever equivalent the site you're using has). If your calculator contains fields you lack the information for, just make the best educated guess you can.

Adjust the estimated amount of your annual contribution according to the maximums (or minimums) as stipulated by the terms of your personal 401k. This way, you can see the possible ranges of the ultimate value of your retirement account.


  • Use a web-based 401k calculator, such as the one you'll find at (see Resources below). You might also try a search for state-specific calculators that factor state tax laws into your 401k calculations.

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