How Much Should You Put in Your 401(k)?
A 401(k) is the main retirement account for most American workers. How much you put in, and how early you start, makes a huge difference by retirement.
The 2026 limits
| Contribution | 2026 limit |
|---|---|
| Employee deferral | $24,500 |
| Catch-up, age 50 and over | +$8,000 |
| Catch-up, ages 60 to 63 | +$11,250 (instead of $8,000) |
| Employee + employer combined | $72,000 |
Most people never reach these limits, but they matter if you are a high earner or catching up later in your career.
Step 1: get the full match
Many employers match part of what you contribute. A typical formula is 50% of your contributions up to 6% of salary. If you earn $70,000 and contribute 6%, you put in $4,200 and your employer adds $2,100.
Contributing less than the match limit means turning down part of your pay. Make capturing the full match your first priority, even before paying extra on low-rate debt.
Step 2: aim for 15%
A common guideline is to save 15% of your income for retirement, counting the employer match. Starting in your 20s or early 30s, that rate gives most people a good chance of maintaining their lifestyle in retirement.
What different rates can grow to
Starting at age 30 with $15,000 saved, a $70,000 salary rising 2% a year, a 50% match up to 6% of pay and a 6% annual return, retiring at 67:
| Your contribution | Balance at 67 |
|---|---|
| 4% | about $840,000 |
| 8% | about $1.43 million |
| 12% | about $1.9 million |
Investment growth is the largest part of the final balance, which is why time matters so much. These figures are not adjusted for inflation; in today’s dollars they would be worth considerably less.
Traditional or Roth?
- Traditional 401(k): contributions reduce your taxable income now; withdrawals are taxed in retirement.
- Roth 401(k): contributions are taxed now; qualified withdrawals are tax-free.
If you expect to be in a higher tax bracket later, or you are early in your career, Roth contributions often make sense. Many people split between both.
Common mistakes
- Cashing out when you change jobs. You lose decades of growth and usually pay taxes plus a 10% penalty. Roll the balance into your new plan or an IRA instead.
- Being too conservative too early. A portfolio heavy in cash or bonds in your 20s and 30s may not grow enough.
- Ignoring fees. A 1% annual fee can reduce your final balance by a large amount over 35 years. Check the expense ratios of your plan’s funds.
How much is enough?
A quick rule of thumb is the 4% rule: withdrawing about 4% of your savings in the first year of retirement, adjusted for inflation afterward. A $1 million balance would support roughly $40,000 a year, on top of Social Security.
Results are estimates for informational purposes only and are not financial, tax, legal or medical advice.