401(k) Compound Interest Calculator

The IRS adjusts these limits annually for inflation under IRS Notice 2025-67. For 2026, the SECURE 2.0 Act's "super catch-up" provision gives workers ages 60–63 a higher ceiling than any other age group.

Source: IRS: 401(k) limit increases to $24,500 for 2026

These limits apply equally to 401(k), 403(b), governmental 457(b), and TSP plans. If you contribute to multiple employer plans in the same year, the $24,500 employee deferral limit is shared across all of them — the IRS aggregates your deferrals.

If you want to go beyond $72,000 using after-tax contributions, that strategy is modeled in the mega backdoor Roth calculator. For savings outside your workplace plan, the 2026 IRA limit is $7,500 ($8,600 if you're 50+). IRS source

This calculator runs a year-by-year simulation rather than a static formula, because your salary changes, contribution limits shift, and fees compound against you over time.

Step 1 — Calculate annual contributions:

employee contribution = annual salary × contribution rate
matchable amount     = min(employee contribution, salary × match limit %)
employer match       = matchable amount × employer match rate
total annual addition = employee contribution + catch-up (if eligible) + employer match

Step 2 — Apply growth and fees to the beginning balance, then add contributions:

gross return   = beginning balance × annual return rate
fees charged   = beginning balance × annual fee rate
ending balance = beginning balance + gross return − fees charged + total annual addition

Returns and fees are calculated on the beginning-of-year balance before new contributions are added. Contributions are treated as end-of-year deposits and do not earn returns until the following year. The ending balance becomes the starting balance for the next year, and the cycle repeats — each year's returns earn their own returns the following year.

What this model assumes and simplifies: The calculator uses a constant annual return, which smooths out real-world market volatility. In practice, getting −20% in year one and +20% in year two produces a worse outcome than getting +0% both years (this is called volatility drag). The calculator does not model taxes on withdrawals or sequence-of-returns risk. Enter a nominal (before-inflation) return rate — the calculator adjusts for inflation separately using the inflation rate in advanced settings. For stress-testing your portfolio against real market history, use the Monte Carlo retirement calculator.

An employer match is an immediate guaranteed return before market forces even apply. A 50% match on your contributions is a 50% instant return on those dollars — no investment can reliably offer that.

Example: An employee earning $85,000 with a plan that matches 100% of the first 3% of salary plus 50% of the next 2%:

The difference between contributing 3% and 5% is $1,700/year from your paycheck — but it unlocks an extra $850/year from your employer. Over 30 years at 7% annual returns, that $850/year of missed match grows to $85,912 in lost retirement wealth.

Math: FV of $850 annual payment, 7% for 30 years = $850 × [(1.07³⁰ − 1) / 0.07] × 1.07 = $85,912

Use the 401(k) contribution calculator to model your specific match formula, or the 401(k) paycheck impact calculator to see how increasing your rate affects your take-home pay.

Fees work like compound interest in reverse. Every dollar paid in fees is a dollar that can no longer compound for your future.

401(k) plans carry two types of fees: administrative fees (charged by the plan provider) and expense ratios (charged by each fund you select). Here's the exact long-term cost on $10,000 contributed per year for 30 years at an 8% gross return:

Math: Each row computed year-by-year as Balance = (Balance + $10,000) × (1 + 0.08 − fee rate), for 30 years.

A 1% fee difference over 30 years costs $201,003 — more than 20 full years of contributions wiped out by fees alone. If your plan only offers high-cost funds, consider contributing just enough to capture the full employer match, then routing additional savings to a low-cost Roth IRA or traditional IRA. You can check your plan's funds and expense ratios at BrightScope or on your plan's fee disclosure document (required annually under DOL regulation §408(b)(2)).

Catch-up contributions let workers 50 and older front-load savings during their highest-earning years. The 2026 catch-up schedule under SECURE 2.0 Act §109:

The ages 60–63 window is significant. The super catch-up provides $3,250/year more than the standard catch-up ($11,250 vs. $8,000). Over all four years, that's $13,000 in additional deferrals — money that still has 5–10+ years to compound before you start drawing it down.

Tax consideration: Large traditional 401(k) balances create large Required Minimum Distributions starting at age 73 (or 75 if born 1960 or later, per SECURE 2.0 §107). If you're aggressively using catch-ups, consider splitting contributions between pre-tax and Roth 401(k) to diversify your future tax exposure. Roth 401(k) contributions are not subject to RMDs as of 2024 (SECURE 2.0 §601). Read more about how 401(k) withdrawals are taxed and RMD strategies to minimize the tax hit.

The most powerful variable in compound growth is time, not the amount invested.

Math: Investor A = FV of $6,000/yr for 10 years at 7%, then that lump sum grows for 30 more years at 7%. Investor B = FV of $6,000/yr for 30 years at 7%.

Investor A contributes one-third the money but ends up with $68,781 more. The $60,000 invested in their 20s had 40 years to compound — doubling roughly every 10.3 years at 7% (the Rule of 72).

This holds at smaller amounts too. Contributing $100/month starting at 25 grows to $256,331 by age 65 at 7%. Contributing $300/month starting at 40 — three times the monthly amount — grows to only $243,635. Starting early wins even when the late starter contributes far more.

If you're starting later, the path forward is maximizing your savings rate and using catch-up contributions. See is it too late to save for retirement and our guide on how much you should save each month.

When projecting your 401(k) growth over decades, the return rate you choose changes the result dramatically. Understanding the difference prevents both false confidence and unnecessary panic.

• Nominal return: The raw percentage your investments earn. The S&P 500 has returned approximately 10.3% annually since 1926 (with dividends reinvested).
• Real return: Nominal return minus inflation. With historical inflation averaging around 3%, the S&P 500's real return is approximately 7%.
• Net real return: Real return minus investment fees. With a 0.5% fee, your effective growth rate drops to approximately 6.5%.

A $500,000 balance projected over 20 years with no additional contributions:

Math: $500,000 × (1 + rate)²⁰ for each rate.

Which rate should you enter in the calculator? If you want to see your projected balance in future dollars (the number you'll actually see on your statement), use the nominal rate. If you want to understand what that balance will buy in today's terms, use the real rate. Most financial planners use 6–7% (real, before fees) for a diversified stock portfolio.

Important context on the "7% assumption": The 7% real return reflects a portfolio heavily weighted toward U.S. stocks. A more conservative allocation — such as the 60/40 stock/bond mix common near retirement — has historically returned approximately 5% real. A target-date fund that shifts toward bonds as you age will produce lower compound growth than a pure equity portfolio. Use the asset allocation by age calculator to determine your appropriate mix. Read more about how inflation affects retirement savings.

One of the biggest advantages of a 401(k) is that your gains compound without annual tax drag. In a taxable brokerage account, you owe taxes each year on dividends and realized capital gains, reducing the amount that compounds forward.

Comparison: $10,000 invested per year for 30 years at 8% gross return:

Assumptions: Taxable account modeled with 2% dividend yield taxed at 15% and ~20% annual turnover generating realized gains taxed at 15%, producing approximately 0.48% annual tax drag (net effective return ~7.52%). Actual drag varies based on fund type, turnover, and your tax bracket. Index funds in taxable accounts have lower drag than actively managed funds.

The $107,660 advantage comes purely from tax-sheltered compounding — and this doesn't include the employer match, which further widens the gap. However, remember that traditional 401(k) withdrawals are taxed as ordinary income, so the after-tax comparison depends on your retirement tax bracket.

Once you see how your 401(k) compounds, the next step is turning that balance into sustainable retirement income. Use the 401(k) future value calculator to project your balance at retirement, then test withdrawal strategies with the retirement withdrawal calculator or the safe withdrawal rate calculator based on the 4% rule.

For a complete picture, coordinate your 401(k) with your other income sources: Social Security, any pension, and personal savings. The retirement income calculator brings all these together. If you're wondering whether your savings are on track, check the benchmarks in retirement savings by age or calculate your retirement readiness score.