401k & IRA Retirement Calculator

Example Retirement Scenarios

Each scenario assumes a 7% annual return, retirement at age 65, and no employer match unless noted. Projections are estimates.

2026 Retirement Contribution Limits and Tax Advantages

Planning for retirement is one of the most important financial decisions you'll make, and understanding the tax-advantaged accounts available to you can dramatically impact your long-term wealth. The IRS sets annual contribution limits for retirement accounts, and for 2026, these limits offer significant opportunities to reduce your current tax bill while building your retirement nest egg.

401(k) Contribution Limits for 2026

The 401(k) elective deferral limit for 2026 is $24,500 for employees under age 50. If you're 50 or older, you can make an additional catch-up contribution of $8,000, bringing your total to $32,500. For employees ages 60-63, a special higher catch-up limit of $11,250 applies, allowing total contributions of $35,750. These limits apply to your employee contributions only — employer matching contributions are separate and do not count toward your limit. The total contribution limit (employee + employer) for 2026 is $69,000 (or $76,500 with catch-up).

IRA Limits and Roth vs. Traditional

The IRA contribution limit for 2026 is $7,500 for individuals under 50, and $8,600 for those 50 and older (including the $1,100 catch-up contribution). Traditional IRA contributions may be tax-deductible depending on your income and whether you have a workplace retirement plan. Roth IRA contributions are made with after-tax dollars, but qualified withdrawals in retirement are completely tax-free. For 2026, Roth IRA eligibility phases out for single filers with MAGI between $150,000 and $165,000, and for married couples between $236,000 and $246,000. High earners above these limits can use a Backdoor Roth IRA strategy: contribute to a Traditional IRA (non-deductible) and then convert to Roth.

Example: Tax Savings from 401(k) Contributions

Consider a single filer earning $85,000 in the 22% marginal tax bracket. If they contribute the maximum $24,500 to a traditional 401(k), their taxable income drops to $60,500 ($85,000 - $24,500). This saves $5,390 in federal taxes ($24,500 × 22%). If their employer matches 50% up to 6% of salary ($2,550), the total annual contribution is $27,050. Over 30 years at a 7% annual return, this grows to approximately $2.5 million. The power of employer matching cannot be overstated — it's an immediate 50-100% return on your contribution.

How Compound Growth Works in Retirement Accounts

The future value of retirement contributions is calculated using the future value of an annuity formula: FV = P × [((1+r)^n - 1) / r], where P is the annual contribution, r is the expected annual return, and n is the number of years. For example, contributing $24,500 annually for 30 years at 7% return yields approximately $2.3 million from contributions alone. Add employer matching and the total can exceed $3 million. Starting early is critical: a 25-year-old who contributes $5,000/year for 10 years and then stops will have more at age 65 than someone who starts at 35 and contributes $5,000/year for 30 years (assuming 7% return).

Traditional vs. Roth: Which Is Better?

The choice between Traditional and Roth depends on your current vs. expected future tax rate. If you expect to be in a lower tax bracket in retirement, Traditional makes sense (deduct now, pay lower taxes later). If you expect to be in the same or higher bracket, Roth is better (pay taxes now, withdraw tax-free). For young workers in lower brackets, Roth is often the smarter choice. For high earners in their peak earning years, Traditional provides immediate tax relief. Many financial advisors recommend tax diversification — having both Traditional and Roth accounts to hedge against uncertain future tax rates.

Common Retirement Planning Mistakes

The biggest mistake is not contributing enough to get the full employer match — this is literally leaving free money on the table. Another mistake is being too conservative with investments early in your career; a 25-year-old has 40 years until retirement and can afford to take more risk. Also, many people forget to increase their contribution percentage when they get raises. Finally, don't cash out your 401(k) when changing jobs — roll it over to an IRA or your new employer's plan to avoid taxes and penalties.

When to Use This Calculator

• Maximizing tax-advantaged contributions: Determine exactly how much you can contribute to 401(k) and IRA accounts under 2026 IRS limits — and immediately see the tax savings.
• Comparing Traditional vs. Roth strategies: Model the trade-off between immediate tax deductions and future tax-free withdrawals to decide which IRA type best fits your situation.
• Evaluating employer match value: Understand the real dollar impact of your company's matching formula and whether you're leaving free money on the table.
• Planning catch-up contributions: If you're age 50+, see how the additional catch-up limits can accelerate your retirement savings in the final working years.
• Projecting compound growth: Visualize how today's contributions compound over decades with different return rate assumptions, helping you set realistic savings targets.

Limitations — What's NOT Included

• Employer match specifics: Actual employer matching formulas vary — some use tiered matches, discretionary contributions, or vesting schedules not modeled here.
• Pension plans and defined-benefit plans: This calculator focuses solely on defined-contribution accounts (401(k), IRA). Traditional pension income is not factored in.
• Social Security benefits: Projected Social Security income — which can be a significant portion of retirement cash flow — is excluded from these estimates.
• Required Minimum Distributions (RMDs): Traditional 401(k) and IRA accounts require withdrawals starting at age 73 (75 for those born 1960+). Tax impacts of RMDs are not modeled.
• Inflation adjustment: All projections are in nominal (today's) dollars. Real purchasing power will be lower due to inflation over the investment period.
• Early withdrawal penalties: The 10% penalty for withdrawals before age 59½ — plus associated taxes — is not calculated.
• State income tax: Only federal marginal rates are used. State tax treatment of retirement contributions and withdrawals varies significantly.
• Roth IRA income phaseout precision: Phaseout calculations are simplified. Actual eligibility depends on exact MAGI, filing status, and IRS worksheets.

Frequently Asked Questions