Understanding the 401(k) calculator
A 401(k) combines three advantages: contributions reduce taxable income today, growth is untaxed until withdrawal, and most employers add a matching contribution commonly 50% of what you put in, up to 6% of salary. The match is an instant 50% return; contributing at least enough to capture all of it is the closest thing to free money in personal finance.
This projection holds salary and contribution rates constant, which understates reality for most careers raises compound your contributions just as returns compound your balance. It also ignores the IRS annual contribution limits, which high earners can hit. Even so, the pattern the numbers show is robust: starting early and capturing the full match dominate every other decision.
Results are estimates for education only and are not financial advice.