Question

Assume you earn $50,000 /year and contribute 10% of your salary to your 401 K, and your will employer match up to 3% of your salary. What is the total amount you are putting away in your account each year?

Answer 1

To calculate the total amount, first find out how much you contribute and then add the amount your employer contributes.

Your contribution: 10% of $50,000

= ($50,000 * 10) / 100

= $5,000

Employer's contribution: 3% of $50,000

= ($50,000 * 3) / 100

= $1,500

Total contribution:

= Your contribution + Employer's contribution

= $5,000 + $1,500

= $6,500

So, the total amount being put away in your account each year is $6,500.

Explanation: