One of your best advantages for securing a good retirement is to obtain a 401k and then calculate 401k savings. You are provided with two advantages when doing so. To calculate 401k savings, lets take a look at these advantages. First, all contributions and earnings to your 401k are tax deferred. When withdrawn, you only pay taxes on those contributions and earnings. Second, employers will pay matching contributions to your 401k plan. This is a huge saving which you cannot afford to ignore.

To calculate 401k savings, consider this: There are annual contribution limits that are based on your total contribution for one year. Your annual contribution can also change to due to certain maximum total contributions per year. The annual maximum for 2009 is %16,500. Beginning at age 50 or older, a catch-up provision allows you to contribute an additional $5,500 into your 401k account. Understand it is important to take into account that employer contributions do not affect an employee’s maximum annual contribution limit. That’s how you calculate 401k savings.

Another important item to remember is some employees are subject to another form of contribution limitations. Employees classified as Highly compensated may be subject to contribution limits based upon their employer’s overall 401k participation. It is important to note that some employees are subject to another form of contribution limitations. Employees classified as Highly Compensated may be subject to contribution limits based on their employer’s overall 401(k) participation. Therefore, if you assume your salary to be $110,000 or more in 2009 or was $105,000 or more in 2008, you might want to contact your employer to see if these additional contribution limits apply.

To calculate the annual rate of return for your 401(k) account, there are calculators that assumes that your return is compounded annually and your deposits are made monthly. The literal rate of return is largely dependent on the type of investments you select. From January 1970 to December 2008, the average annual compounded rate of return for the S&P 500, including reinvestment of dividends, was about 9.7% . During this time, the highest 12-month return was 61%, from June 1982 through June 1983. The lowest, during this time, 12-month return was -39%, which happened twice, once from September 1973 to September 1974 and again from November 2007 to November 2008. Savings accounts at a bank may pay as little as 1% or less but carry significantly lower risk of loss of principal balances.

It is always wise to remember how future rates of return can’t be predicted with certainty and that investments that pay higher rates of return are generally subject to higher risk and volatility. The actual rate of return on investments can change somewhat over time, especially for long-term investments. This can include the potential loss of principal on your investment. Remember, It is not possible to invest directly in an index and the compounded rate of return noted above does not reflect sales charges and other fees that funds and/or investment companies may charge. To calculate 401k savings, do your research, talk with a financial consultant, and be advised on what is the best route for you.