Retirement Contribution Rate Calculator
Are you maximizing the value of your employer-sponsored retirement plan? Try using this contribution rate calculator to see the long-term financial impact of small increases in your contribution rates. Consider giving yourself a retirement raise! For more information, contact us.
Note: This calculator is a Java applet and may not be optimized for some versions of browsers developed for the Apple Macintosh operating system.
- All employer and employee contributions are assumed to happen monthly, with deposits happening at the beginning of the month. The amount of the contributions is the annual amount divided by 12.
- All changes to employees' earnings and/or maximum contributions happen on an annual basis. For example, if the employee currently earns $40,000 and expects a 5% percent increase in salary per year, the first year of the calculations will use $40,000 for their annual salary. At the start of the second year, the annual salary will be increased 5% to $42,000. Contributions by the employer and employee are assumed to be constant during the year until the next salary increase occurs. All calculations that use salary will be affected annually by the projected salary increase.
- Employer match is limited by a maximum amount. This is the maximum percent of the employee's salary matched by the employer regardless of the amount contributed by the employee. For example, assume the employer has a 50% match up to a maximum of 6% of annual salary. An annual salary of $25,000 and a contribution of 6% produces an annual contribution of $1,500. With a 50% match, the employer will add another $750 to the account. If the contribution is increased to 10%, then annual contribution is $2,500 per year by the employee. The employer match, however, is limited to the first 6% of salary and remains at $750.
- The annual rate of return is used to calculate an effective monthly rate of return. The effective monthly rate of return, if compounded monthly, produces the exact annual rate of return entered on the calculator. The effective monthly rate of return is slightly lower than dividing the annual rate of return by 12. This difference allows for monthly compounding without over stating the annual rate.
- We assume at retirement occurs when the employee reaches retirement age, contributions are not made during that year. For example, if the current age entered is 30 and the retirement age entered is 65, we assume contributions will be made for each year starting at the beginning of age 30 to the end of age 64, which is exactly 35 years. Contributions and totals end when the employee turns 65.
The analysis provided by this tool is based solely on the information provided by you. All examples, if any, are hypothetical and for illustrative purposes and do not represent current or future performance of any specific investment. No guarantees are made as to the accuracy of any projection. This information does not serve, either directly or indirectly, as legal, financial or tax advice and you should always consult a qualified professional legal, financial and/or tax advisor when making decisions relative to your individual tax situation. All investments carry a degree of risk, and past performance is not a guarantee of future results. Generally speaking, the greater the return, the greater the risk.cn66461112011