A workplace plan over a full career
A 401(k) is contributed to from pre-tax salary, which means the amount leaving your pocket is smaller than the amount arriving in the account. The contribution figure here is what lands in the plan.
Any employer match sits on top and is the highest-return element of the whole arrangement. A 50% match on the first 6% of salary is an immediate 50% return that no market provides.
The formula behind the number
Two things grow at once: the sum already invested, and each new contribution from the moment it arrives. Together they give:
Here P is the opening balance, M the monthly contribution, i the monthly return and n the number of months. The second term is why contributions made early matter more than contributions made late: each one is multiplied by growth for every month it remains invested.
Worked example: $800 a month for 30 years
The calculator opens on $800 every month and nothing to start with, at 7% a year for 30 years.
- Total paid in: $288,000
- Ending balance: $975,977
- Growth: $687,977, which is 239% of what you contributed
Growth is well over twice the contributions, and that is before counting any employer match.
Why the second half does the heavy lifting
At the halfway point, after 15 years, the balance is $253,570 — around 26% of the final figure, not half of it.
| Year | Paid in | Growth | Balance |
|---|---|---|---|
| 5 | $48,000 | $9,274 | $57,274 |
| 10 | $96,000 | $42,468 | $138,468 |
| 15 | $144,000 | $109,570 | $253,570 |
| 20 | $192,000 | $224,741 | $416,741 |
| 30 | $288,000 | $687,977 | $975,977 |
This is why leaving a match unclaimed is expensive: the missed contribution compounds for the rest of the career, not just for the year it was skipped.
What starting late costs
Delay by 5 years and, contributing at the same rate, you end with $648,057 instead of $975,977. That is $327,919 less for $48,000 of skipped contributions — the gap is the growth those early payments would have earned.
How sensitive is this to the return
The rate is an assumption, not a fact, so it is worth seeing the range. Two points higher gives $1,464,595; two points lower gives $665,807. Plan fund choices differ by more than two points in expected return, so the fund selection inside the plan matters as much as the contribution rate.
What this calculator leaves out
Employer match, contribution limits, vesting schedules, and the income tax due on withdrawal. The balance shown is pre-tax; the spendable amount will be lower.
What the match is worth
Suppose the employer matches half of the first 6% of a $70,000 salary. That is $175 a month of free contribution, on top of the $800 modelled above.
Added for the full 30 years at the same 7%, the match alone reaches roughly $213,000. Declining it is the most expensive decision available inside a workplace plan, and it costs nothing to accept.
Related calculators
- Roth IRA calculator — the after-tax alternative
- Retirement calculator — the whole pot across all accounts
- Required distributions — what must come out later