State Tax Rate
Your state tax rate is calculated based on your input for Annual Salary and State Residence.
Marginal Federal Tax Rate
Your federal tax rate is calculated based on your input for Annual Salary.
Annual Raise Percentage
Default is 0% based on the assumption that salary increases will be nullified by inflation.
Per Month Contributions
The Per mMnth Contributions field allows you to select how you would like to enter your monthly savings amount:
Note: This calculator does not take into account contributions that exceed legal limits. To determine the contribution limits for your retirement accounts, please ask your plan provider.
Employer Match Percentage
The percentage your employer contributes to your 401(k) regardless of when that amount becomes vested.
Investment Return Percentage
The return on your investment is the percentage the account value increases based on your investment’s performance. This calculator assumes that your deposits are made at the beginning of the year, and the return is compounded at the end of the year. Your actual investment may or may not be compounded this way.
The default setting of 5% was chosen based on the historical performance of several stock indices including the Standard & Poor's 500. It is important to remember, however, that future rates of return cannot be predicted with certainty, and that investments which pay higher rates of return are subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment.
Retirement Income Amount
Calculated based on the percentage of annual income required to maintain your current standard of living in retirement. Default setting is 65%.
Immediate Rate of Return
The immediate rate of return (ROR) percentage is calculated by dividing the immediate earnings on your actual savings amount (employer match + tax savings) by the actual savings amount (annual take home pay with no 401(k) deferral – annual take home pay with 401(k) deferral.)
Annual Salary = $50,000
Deferral Percentage = 3.00%
Employer Match = $1,500
Tax Savings = $283.50 (based on 17% marginal federal tax rate and 1.84% state tax rate)
Annual Take Home Pay without Deferral = $40,580.00
Annual Take Home Pay with Deferral = $39,363.50
1,500 + 283.50
---------------------------- = 1.46609
40,580 – 39,363.50
Immediate ROR for First Year of Investment = 146.61%
The projected assets are the combined totals of your yearly contributions and yearly earnings from now until you retire.
The retirement goal amount is the total savings you would need to build in order to maintain your retirement lifestyle (based on the retirement income percentage you selected) until age 92.
Goal amounts are calculated using the present value of growing annuity formula*. This determines the lump sum required to pay the retirement income amount each year through age 92.
*Assumes a conservative portfolio with 3% annuity payment growth and 2.5% growth in account balance per year.
Your earnings are based on the market return percentage you provided. The default setting is 5%. Earnings are calculated annually and include each year's total contributions.
Your contributions are the actual dollar amount you will have set aside by the time you retire, based on the numbers you supplied to the calculator.
Your annual 401(k) contribution expressed as a dollar amount.
Difference in Take Home Pay
The impact of your contributions and tax savings on your take home pay.
Annual 401(k) Tax Earnings
Your current tax savings resulting from investing pre-tax dollars in a 401(k) plan.