Simple 401k Calculator
Your objective is to calculate the compound interest growth and future value of your monthly contributions. This can be achieved simply be entering your beginning balance, an aggregated estimate for all contributions (yours, employer match, catch-up), an estimate for return on investment, and the number of years until retirement, then click the "Compute" button.
Don't be deceived by more complex 401k calculators that include more variables. It might appear more accurate but that accuracy deceives.
For example, many calculators include salary growth but fail to subtract for inflation. Similarly, not all employer 401k contribution limits conform with federal guidelines (which change regularly) but many calculators provide no mechanism to adjust for these alternatives.
In short, it is wiser to keep this calculation very simple by assuming an average annual contribution in today's dollars that balances for future growth in earnings, your unique employer matching situation, catch-up contributions, highly compensated employee limitations, and other variables. Just aggregate these various factors into a simple annual contribution and think exclusively in terms of today's dollars. Otherwise, you complicate the process with variables you can never estimate accurately (future inflation, salary growth, changes in federal contribution limits, changes in employer policy).
While this simplified solution is not perfect, it is no worse than more complex alternatives as explained in this article here.
Simple 401k Calculator
Ever wondered how your savings would multiply and make you a rich man when you retire? The impulsive urge in you compels you to discern the future value of your hard earnings, the money that you chose to save for the rainy days. The last thing anyone would want is the feeling of insecurity during our golden years.
Proper financial planning is the start to a secured future. And your 401K could be the key. What people look for are simple guidelines to achieve this goal. And for this, we need not go behind a finance planner. Our Simple 401K calculator can guide you as you plot your future yourselves.
Not A Math Whiz? Worry Not
Finding out how much growth your savings would achieve is no longer a task only an accountant or a financial wizard can decipher. By simply plotting the digits and actually performing a series of “what-ifs,” you can easily arrive at the amount you envision for your future. You can play around with the actuals (the amount you already save each month) and the extras (the additional contribution that you are willing to contribute in your 401K policy.) The simple 401K Calculator can be your best tool for creating a secure retirement. Just follow the step-by-step procedure.
Calculating the compound interest growth and future value of your monthly contributions is as simple as entering your beginning balance, the combined contributions (yours, your employer, catch-up), and estimate for return on investment, and the number of years until retirement.
Anyone And Everyone Can Be Rich Someday
A middle-aged factory worker, with another thirty years of active service, can easily plan to create an effective saving scheme for his retirement. All he needs to do is to try and raise his contributions to his 401K plan, whether his employer decides to match his contribution or not will not affect the amount of growth his money would get, not to mention the tax benefits he would enjoy by simply adding to his own savings. A five percent additional contribution may look small at the moment, but he will surely reap rich dividends at the age of retirement. The simplified 401K calculator can actually present him with that figure, instantly.
There are dime a dozen of 401K calculators available on the internet or your next door financial expert. Some are more complex and the others have features that confuse the common man with terms and figures that can complicate rather than facilitate his goal of looking for an answer to his questions regarding a secured future. There are those that feature the inclusion of salary growth but without any provision to adjustment in deductions caused by inflation. Also, the contribution of the employer is taken as a fixed amount by most calculators, though in reality, it may not be as rigid since it fluctuates with the changes in the federal guidelines. Those calculators do not have the provision to adjust to the changing terms and regulations and thus, a complete solution is far from realization.
Keep It Short And Simple
To many, what matters most is a ballpark figure of how much money they will have when they hit the 60s — simple and matter-of-fact figure in dollars! It can actually be achieved in very few and really easy guidelines. One, use simple calculations — work out how your average contribution in today’s dollar that balances for future growth in earnings, your employer’s matching sum, catch-up contributions, highly compensated employee limitations, and other variables. Bundle up all these figures to arrive at a simple annual contribution. And, focus only on how it compares with the present value of dollars. Never go into the essentials of something that is completely out of your control, like inflation, salary growth, changes in federal contribution, or changes in employment policies.
Other alternatives may look fanciful, but it can be more complicated and exasperating. What the Simple 401K Calculator offers is an instant solution based on your ability and capability to match your dexterity in putting together a little more for a much bigger things to look forward to, in the future!
Simple 401 K Calculator Terms And Definitions
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