Monthly vs. annual compounding: This calculator uses monthly compounding — the way real 401k contributions work (contributions come out of every paycheck and start earning immediately). Some calculators use annual compounding, which will show slightly lower results. The difference is typically 5–9% on long time horizons.
⚠️ Hypothetical
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Compounding: This calculator uses monthly compounding — the same way real 401(k) and investment accounts work. Your contributions are deposited each month and begin earning returns immediately. Returns compound every month at 1/12th of the annual rate.
Contributions: Your annual salary is divided into 12 equal monthly contributions based on your contribution percentage. As your salary grows each year (via the annual raise input), your contribution amounts grow proportionally.
Auto-escalation: Your contribution percentage increases by the escalation amount at the end of each year, until it reaches the cap you set. For example, starting at 6% with 1% escalation and a 15% cap means: year 1 = 6%, year 2 = 7%, ..., year 10 = 15%, year 11+ = 15%.
Salary growth: Your salary is assumed to grow at the annual raise percentage each year, compounding year over year. This increases your dollar contribution amount even if your contribution rate stays the same.
Without escalation baseline: The comparison scenario holds your contribution percentage fixed at your starting rate for the entire projection period, while still applying the same salary growth and return assumptions.
Why might results differ slightly from other calculators? Small differences in results between this calculator and others (such as UBT or Fidelity) are normal. Variations stem from differences in how salary growth is applied (beginning vs. end of year), rounding methods, and compounding intervals. Our calculator uses true monthly compounding applied at the start of each month. Results may run slightly higher than some tools as a result.
⚠️ All projections are hypothetical and for illustrative purposes only. This calculator does not account for taxes, employer match, inflation, investment fees, 401(k) contribution limits, or changes in income beyond the stated raise. Results should not be considered personalized financial advice. Past investment returns do not guarantee future results.