How a 401(k) grows
A 401(k) is an employer retirement plan. You choose a percentage of each paycheck to contribute before tax (traditional) or after tax (Roth), and many employers match part of it, which is free money. Investments grow tax-deferred until retirement.
2026 contribution limits
- $24,500 of your own contributions.
- +$8,000 catch-up from age 50 ($32,500 total).
- +$11,250 at ages 60–63 ($35,750 total).
- Employer contributions are on top of these.
Worked example
Age 30, salary $80,000 rising 2% a year, contributing 6% with a 50% match up to 6% of pay, $10,000 already saved and a 7% return. By 65 the balance reaches about $1.36 million: $240,000 of your contributions, $120,000 from the employer and around $986,000 of investment growth.
Get the full match
Contributing less than the match limit leaves part of your pay on the table. In the example, dropping to 3% would also halve the employer's contributions.
How this works
Year by year, the page adds your contribution (capped at the 2026 limit for your age), the employer match and a year of growth at your assumed return, then raises your salary. The chart shows how much of the balance is your money, the employer's and growth. Limits are kept at 2026 levels and amounts are in today's nominal dollars.
Frequently asked
What is the 401(k) limit for 2026?
$24,500, plus an $8,000 catch-up from age 50 or $11,250 at ages 60 to 63.
How does an employer match work?
A common formula is 50% of what you contribute, up to 6% of pay: contribute 6% and the employer adds 3%.
What return should I assume?
Many planners use 5–7% for a diversified stock-heavy portfolio before inflation.
Does this include inflation?
No. Results are nominal dollars; divide by expected inflation to see today's value.
Sources
- IRS — 401(k) limit increases to $24,500 for 2026, IRA limit increases to $7,500
- Investor.gov (U.S. SEC) — Compound interest calculator and method
Reviewed Oct 17, 2026 · test vectors fixtures/calculators/finance/us/401k-calculator/