The match is the part most calculators leave out
Plenty of retirement calculators model compound growth on your own contributions and stop there. That understates what a 401(k) actually does for you if your employer offers a match — money that shows up in your account without coming out of your paycheck at all. On the default numbers above, a meaningful share of the projected balance at retirement is employer money, not salary you ever had to give up. That’s the number worth paying attention to.
Key terms
Employer match
Money your employer adds to your 401(k) on top of your own contribution, usually as a percentage of what you personally contribute, up to a cap. It doesn’t come out of your paycheck.
Vesting
The schedule by which employer match money actually becomes yours to keep if you leave the company. Your own contributions are always 100% yours immediately; match money may require a few years of employment before it’s fully vested.
Catch-up contribution
An additional amount the IRS allows workers 50 and older to contribute beyond the standard annual limit, on top of the regular cap — $8,000 for 2026, or $11,250 if you’re 60 to 63.
Contribution limit
The maximum amount you personally can contribute to a 401(k) in a given year, set annually by the IRS. Employer match contributions are not counted against this limit.
Pros and cons of a 401(k)
Pros
- Tax-advantaged growth — traditional contributions reduce taxable income now; a Roth 401(k) option, where offered, grows tax-free instead
- Employer match is essentially free compensation, if your plan offers one
- Higher annual contribution limits than an IRA
- Contributions happen automatically from payroll, removing the need to remember to invest
Cons
- Investment choices are limited to whatever menu of funds your specific plan offers
- Employer match may be subject to a vesting schedule before it’s fully yours
- Early withdrawals before age 59½ typically trigger a 10% penalty plus ordinary income tax
- Plan administrative fees vary and are sometimes higher than a comparable IRA at a low-cost brokerage
How the match is actually structured
This calculator models the most common structure: your employer matches a percentage of what you contribute, up to a cap expressed as a percentage of your salary. “50% up to 6%” means that for every dollar you contribute, up to 6% of your salary, your employer adds fifty cents — contribute less than 6% and you leave part of the match unclaimed; contribute more than 6% and the match stops growing. If you don’t know your plan’s exact match formula, your benefits documentation or HR department has it, and it’s worth five minutes to look up precisely.
Why leaving match on the table is different from other financial mistakes
An unclaimed employer match isn’t a missed opportunity in the abstract sense — it’s closer to a pay cut you’re choosing not to notice. If your plan matches 50% up to 6% and you’re only contributing 3%, you’re forfeiting real compensation your employer has already budgeted for you. Before optimizing anything else in your financial plan — before extra debt payoff, before a taxable brokerage account — contributing enough to capture your full match is usually the highest-certainty return available to you.
What the contribution limit means for high earners
The IRS caps how much you can personally contribute each year — $24,500 for 2026, with an additional $8,000 catch-up if you’re 50 or older, or $11,250 if you’re 60 to 63. If your salary and contribution percentage would put you over that limit, the calculator caps your modeled contribution at the actual legal limit for each year rather than letting the number run past what’s realistically possible. Employer match contributions aren’t counted against this particular limit.
Why the raise assumption matters more than it looks
A modest annual raise compounds the same way investment returns do — a 2.5% raise every year for 30 years meaningfully increases both your contribution dollars and your employer’s match dollars over that period, since both are calculated as a percentage of a growing salary. Try setting the raise to 0% and compare the projected balance; the gap shows you how much of long-term 401(k) growth actually comes from career income growth rather than market returns alone.
Using this calculator
Enter your actual plan’s match formula rather than a guess — it’s the single input that changes this calculator’s value the most compared to a generic compound interest tool. The year-by-year table shows exactly how your contributions, your employer’s match, and investment growth each contribute to the balance at every age, and the full schedule is available as a CSV download.
This article is for educational purposes only and isn't legal, financial, or tax advice. See our Disclaimer for details.
