The 401(k) is the primary retirement savings vehicle for many Americans and is a tax-deferred method to put money aside for the future. Individual results from 401(k) investing can vary, so it is important to keep a close eye on your accounts and make adjustments when required. Microsoft Excel provides powerful tools to assist you in this task.

## Regular Contributions

As of 2011, the most that you can contribute to a 401(k) is $16,500 per year, or $22,000 if you are over age 50. Since you may face a penalty for exceeding this amount, you should track your contributions. You can use Excel as a simple journal, where each contribution is entered, with a separate column entry for each date and amount, as well as which employer's plan the contribution comes from if you have more than one job. At the bottom of the sheet, enter an "@sum" function with the first cell of the amount contribution and last cell entered between parentheses separated by a colon. This will track the total contributions, letting you know when you approach your maximum.

## Projected Yearly Growth

Planning for what your 401(k) will be worth in the future is critical to knowing if you are saving enough money for retirement, and Excel has a method to perform this task. Create a column that projects annual growth. Starting in the first column of a blank spreadsheet, enter the years starting with the current year through the year you plan to retire. Label the next column "Beginning Balance," followed by "Annual Contribution." The next columns are labeled "Projected Interest Rate" and "Ending Balance." Under the Beginning Balance row for the second year, enter an equals sign and the cell reference for the Ending Balance column in the first year. In the first row of the Ending Balance column, enter a formula multiplying the Beginning Balance by the interest rate, adding the product of this to the contribution and beginning balance. Drag each of these entered formulas down by selecting the cell and clicking on the square in the bottom right-hand corner. As you populate the non-calculated fields, you will see a projection of your 401k balance each year.

## Tax Savings

Since 401(k) savings are before-tax savings, the amount of the contribution is deducted from your reported salary that you will pay income taxes on. This results in a reduction of the income tax you must pay. Enter your projected annual salary in one cell, and your marginal tax rate in another. Create a formula in the third cell multiplying the two, and the product is your approximate tax savings for your contribution.

## What If Scenarios

Excel is particularly useful for manipulating the data and performing what-if scenario analysis. Using the projected yearly growth spreadsheet, you can enter multiple variables in contributions and interest rates to determine what the optimum contribution levels are for you. Experiment with adding a column for projected inflation rates and calculate a column reducing the projected ending amount by that projection to get a picture of what your actual spending power is likely to be at retirement.

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