How does my 401(k) affect my take-home income? We often know the cost of spending, but is there also a cost associated with saving? There is. When you contribute to an employer-sponsored 401(k) retirement plan your contribution may be tax-deductible, thus lowering the amount of tax you pay. If you were to forgo this contribution and save the money instead, you would still be liable for paying taxes on that income. In this way, a dollar contributed into an eligible retirement account is often worth more than a dollar contributed to a regular savings account. 

 

Use this calculator to identify the cost of savings versus retirement contributions. This calculator will provide an estimate, taking into account your income, tax bracket and potential 401(k) contribution amount.