What will 401k be worth

Please enable Javascript in your browser and try again. Now Reading:. Membership My Account. Rewards for Good. Share with facebook. Share with twitter. Share with linkedin. Share using email. Updated May, It provides you with two important advantages.

First, all contributions and earnings to your k are tax-deferred. You only pay taxes on contributions and earnings when the money is withdrawn. Second, many employers provide matching contributions to your k account. Even without matching, the k can still make financial sense because of its tax benefits. A k really only makes sense as a retirement savings plan, and not as a general savings account. Secondly, investments made through a k often carry risk.

As mentioned above, you will select from an array of investment choices with varying levels of risk, and with many of these, it is possible albeit unlikely that you may lose money over time. Keep that in mind when deciding how to allocate your retirement savings.

It's important to also steer clear of k plans that charge high fees if you want to keep more of your money working for you.

In all, however, the k is a great option for you retirement savings. Given the tax advantages, the ease of use and the possibility of those additional matching funds, if your employer does offer a k , you should definitely consider taking advantage of it.

Try putting your specific numbers into a k calculator to see how it could work for you. Zoom between states and the national map to see data points for each region, or look specifically at one of four factors driving our analysis: unemployment rate, percentage of residents contributing to retirement accounts, cost of living and percentage of the population with health insurance.

Methodology Where are the places in the country with the best employee benefits? To answer that question we analyzed data on four factors: unemployment rate, percentage of residents contributing to employer retirement accounts, cost of living and percentage of the population with employer health insurance.

First, we looked at the percentage of the county population that is unemployed. We then indexed the ratio to , with a score of representing the county with the lowest unemployment.

Next, we calculated the percentage of the population contributing to retirement accounts. We did this by multiplying the employed population of each county by the percentage of the population that have access to employee retirement plans, and then by the percentage of employees that participate in those plans.

We indexed the final values to , with a value of reflecting the county where the most people who have access to employee retirement plans are contributing to those plans. Then we looked at the cost of living in each county as a percentage of the average income in that county. We indexed these values to , with a value of reflecting that county where the ratio of cost of living to income is the lowest. We then calculated the percentage of people in each county that have health insurance through an employer.

We indexed these values to , with a value of reflecting the county with the highest percentage of the population covered by employer-sponsored health insurance. Finally, we calculated a weighted average of the indices for unemployment, percentage of residents contributing to employer retirement accounts, cost of living and percentage of the population with employer-sponsored health insurance.

We indexed the final number so higher values reflect the best places for utilizing employee benefits. What is an Index Fund? How Does the Stock Market Work? What are Bonds? Investing Advice What is a Fiduciary? What is a CFP? I'm an Advisor Find an Advisor. Your Details Done. My Details. Your location is used to determine taxes in retirement.

Do this later Dismiss. Annual Income. We'll use this to estimate your taxes in retirement. This is used to figure out your age and the number of years before you retire.

Retirement Age. Full benefits from social security are available at age 66 or 67 depending upon your birth year. Are you curious about how much your k plan could grow between now and the time you retire?

Use our k Growth Calculator to estimate the accumulation of your pre-tax salary contributions along with any employer matching contributions. What Is a k? A k is a specific type of retirement plan only offered to employees through an employer; you cannot establish a k on your own like you can an individual retirement account IRA. A k allows you to put aside pre-tax dollars — up to a certain limit set by the Internal Revenue Service IRS — into a retirement account whose investments usually mutual funds are determined by your employer and often management by a third-party investment company.

Unlike an IRA, you have fewer investment choices with a k because your employer manages what specific investments are offered to you. Because a k allows your investment income to accumulate tax-deferred and affords you specific tax benefits with the IRS, it is classified as a qualified retirement plan.

With a k , your employer also may offer you matching contributions — maxing out at a certain percentage of your annual k contribution — as a part of your benefits package. Once you retire from your employer, you become fully responsible for the funds from your k account. And if you transfer to another job, you may choose to roll over your k into an IRA or to your new employer. Learn more about the differences between a k retirement plan and an IRA.

How Much Can You Contribute to a k? Each tax year the IRS establishes its k contribution limits. Two annual limits apply to these contributions: 1 a limit on your employee elective salary deferrals contributions you make to your k plan in lieu of receiving this money as salary and 2 an overall limit on contributions to your k , including employer matching contributions.

How Does a k Grow? The growth of your k largely depends on the amount of money you contribute to your account each year as an employee and the matching contributions that your employer adds to your account over time.

The more money you and your employer contribute to your k , the more potential it has to grow. The other important factor influencing how quickly you accumulate money in your k retirement account is the growth of your investments, which depends on your annual rate of return. Because your employer or a third-party investment firm hired by your employer manages the investments in your k , you have less choice and control over how the funds in your k account are invested compared to an IRA.

To review long-term market returns for small-company stocks, large-company stocks, government bonds and U. Understanding these historic compound annual return rates may help you gauge expectations for your k. Through the power of compounding interest the retirement savings you and your employer deposit into your k account may grow into a sizeable sum.

Keep in mind that investments in a k are subject to market risk, including the potential to lose the entire principal amount invested. You have 37 years until you retire. You get paid biweekly.