What's the difference between a 401(k) and an IRA?

A 401(k) is an employer-sponsored retirement plan, often featuring an employer match. An Individual Retirement Arrangement (IRA) is a plan you open on your own. Both offer tax advantages to help you save for retirement. You can have both.

What is a good rate of return for a 401(k)?

A long-term historical average for a diversified stock portfolio is around 7-10% annually. For planning purposes, using a more conservative 6-8% is common. Your actual return will depend on your specific investments (e.g., stocks, bonds, target-date funds).

401(k) & IRA Calculator

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The Automatic Wealth-Building Machine

Your 401(k) or IRA is one of the most powerful wealth-building tools you have. It works like a machine, combining three key ingredients for financial success: **consistent contributions** from your paycheck, **"free money"** from your employer's match, and the incredible power of **compound interest** working behind the scenes for decades.

This calculator shows you the stunning result of that machine at work. By entering just a few details about your savings plan, you can see a clear projection of your future. The most exciting part is seeing how much of your final balance comes from **Total Interest Earned**—the money your money made for you. It’s a powerful motivator to start saving early and stay consistent on your journey to a secure retirement.

Plan Your Entire Financial Future

Retirement Calculator: Take a broader look at your overall retirement needs and potential shortfalls.
Compound Interest Calculator: A simple tool to visualize the core concept that powers your 401(k).

Frequently Asked Questions (FAQ)

What is an employer match?

An employer match is when your company contributes to your 401(k) based on your own contributions. For example, a common match is "50% of the first 6% of your salary". This means if you contribute 6% of your pay, they will add an extra 3%. It's a 50% return on your investment instantly and is the most important "free money" you can get.

How much should I contribute to my 401(k)?

At the absolute minimum, you should contribute enough to get the full employer match. Beyond that, a common goal is to save at least 15% of your pre-tax income for retirement. The more you can save, and the earlier you start, the better.

Traditional vs. Roth 401(k)/IRA?

The main difference is when you pay taxes. With a **Traditional** account, you contribute with pre-tax dollars, lowering your taxable income today. You then pay taxes on your withdrawals in retirement. With a **Roth** account, you contribute with post-tax dollars, meaning you get no tax break today, but all your qualified withdrawals in retirement are tax-free.