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401(k) Spend It or Save It Calculator
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| There are several ways to manage your 401(k)
balance when you leave an employer. The most fundamental of which
is should you spend it or save it? Depending on your age and tax
bracket, making the wrong decision can cost you thousands of dollars
both in taxes and lost earnings. This calculator helps illustrate
the difference. |
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Definitions
- Current age
- Your current age.
- Age of retirement
- Age you wish to retire. We calculate the ending balance at retirement for each of your rollover options.
- Federal income tax rate
- Consult the table below to determine your federal tax bracket. If you are unsure, the calculator will choose 27%. Please note that the calculator does not factor in state taxes.
| Filing Status and Income Tax Rates 2003 |
Tax rate | Married filing jointly
or Qualified Widow(er) | Single | Head of household | Married filing separately |
| 10% | $0 - 12,000 | $0 - 6,000 | $0 - $10,000 | $0 - 6,000 |
| 15% | $12,001-47,450 | $6,001-28,400 | $10,001-38,050 | $6,001-23,725 |
| 27% | $47,451-114,650 | $28,401-68,800 | $38,051-98,250 | $23,726-57,325 |
| 30% | $114,651-174,700 | $68,801-143,500 | $98,25-159,100 | $57,326-87,350 |
| 35% | $174,701-311,950 | $143,501-311,950
| $159,101-311,950 | $87,351-155,975 |
| 38.6% | over $311,950 | over $311,950 | over $311,950 | over $155,975 |
- State income tax rate
- The current State marginal tax rate you expect to pay on any additional income (or taxable distributions).
- Current 401(k) balance
- The starting balance or current amount you have invested or saved in your 401(k).
- Annual rate of return
- The annual rate of return for your 401(k) account. The actual rate of return is largely dependant on the type of investments you select. For example, from January 1970 to February 2003, the average compounded rate of return for the S&P 500, including reinvestment of dividends, was approximately 11%. Savings accounts at a bank pay as little as 1% or less. It is important to remember that future rates of return can't be predicted with certainty and that investments that pay higher rates of return are subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment.
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