About the DC Pension Return Comparison Simulator
In defined contribution (DC) plans such as 401(k)s, the investment fund you choose has an enormous impact on your retirement balance. This simulator lets you enter a monthly contribution amount and investment period, then compare the final balance for up to three funds with different annual return rates. It highlights the power of compound growth and helps you see why fund selection matters more the further you are from retirement.
Why Fund Choice Matters
For a $500/month contribution over 30 years, the difference between a 3% and a 7% annual return is roughly $300,000 in final balance. Low-cost index funds often outperform actively managed funds over long periods after fees. As retirement approaches, shifting toward lower-volatility options (bonds, stable-value funds) helps protect accumulated gains.
FAQ
A defined contribution plan lets you choose investment funds and accumulate a balance based on contributions and investment returns. Unlike a defined benefit plan, the final payout is not guaranteed and depends on performance.
Enormously over long periods. A 1% annual difference compounded over 30 years on $500/month contributions can result in a six-figure difference in final balance due to compounding.
No. Results are pre-tax, pre-fee. Real balances will be lower after expense ratios and income taxes on withdrawals at retirement.