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When savings rates matter more than rates of return

Early in a participant's career, contributions do more of the heavy lifting than investment returns. This calculator shows when that flips — the year portfolio growth overtakes what's going in — so you can show clients why plan design decisions like deferral defaults, match formulas, and auto-escalation have an outsized impact on outcomes.

What you'll need

  • Annual compensation — the participant's current salary
  • Employee deferral — the percentage of pay the participant contributes
  • Employer match — a flat percentage of pay the employer adds
  • Average annual net return — long-run expected return, after fees
  • Auto-escalation — how many points per year the deferral rate steps up

Inputs

$
3%
What the participant defers, as a share of pay.
0%
A flat share of pay the employer adds.
7%
Long-run average, after fees.
+1 pts/yr
Employee deferral steps up this many points of pay each year, capped at 15%.
Year 1 contribution $2,400
Crossover point
Year —
Balance at crossover
—
From contributions
—
From growth
—
Contributions to date Growth to date

Methodology. For each year, the employee deferral and a flat employer match — each entered as a percentage of compensation — are contributed at the start of the year and earn the net annual return you enter for that same year. Compensation is held flat. Auto-escalation raises the employee deferral by the amount selected each year until it reaches a 15% cap; the employer match is a flat percentage of pay and does not escalate. The crossover point is the first year the account's investment growth meets or exceeds that year's total contribution. Amounts are rounded and shown in nominal dollars.

Assumptions and limitations. This is a simplified, single-account illustration. It assumes a constant annual return with no market volatility or sequence-of-returns risk, and it does not reflect investment fees or expenses beyond the net return you enter, taxes, inflation, raises or wage growth, IRS contribution and compensation limits (including 402(g), 415, catch-up, and 401(a)(17)), employer-contribution vesting schedules, loans, hardship or in-service withdrawals, missed or paused contributions, job or plan changes, or the specific terms of any plan. Real accounts gain and lose value from year to year; actual results will differ, potentially by a wide margin.

Not advice; no guarantee. This tool is provided by Independent Retirement for general educational purposes only. It is not investment, tax, legal, actuarial, or fiduciary advice, is not a recommendation to take or refrain from taking any action, and is not an offer or solicitation of any product or service. The returns shown are hypothetical, do not represent any actual investment, and do not guarantee future results. Before making decisions about a retirement plan or account, consult your own qualified tax, legal, and financial advisors and review your plan's governing documents.

Your inputs. The calculator runs entirely in your browser. The values you enter are not collected, stored, or transmitted.

Plan design is the lever.

Auto-escalation, the match formula, and deferral defaults shape outcomes more than fund selection in the first decade. We can help you design plans that get participants to the crossover faster.

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