How Much Should You Contribute to Your 401(k)?

A 401(k) is one of the most effective retirement tools available — tax advantages, automatic payroll contributions, and often free money from your employer. But how much should actually go in? Here's a simple, ordered way to decide.

Step 1: Always get the full employer match

If your employer matches contributions, contribute at least enough to capture the full match before anything else. A typical match — say 50% of your contributions up to 6% of salary — is an instant, guaranteed return on your money. Leaving it on the table is turning down part of your pay. This is the single highest-priority step.

Step 2: Aim for 15% of your income

A widely used guideline is to save about 15% of your gross income for retirement, including any employer match. So if your employer kicks in 3%, you'd contribute around 12% yourself.

If 15% feels out of reach today, don't let perfect be the enemy of good. Start where you can, then raise your contribution by 1% each year or whenever you get a raise — you'll barely feel it, and the long-run difference is large.

Step 3: Know the 2026 limits

For 2026, you can contribute up to $24,500 of your own money to a 401(k). If you're 50 or older, you can add a catch-up contribution, for a total of $32,500. (Savers aged 60–63 get an even higher catch-up under current rules.) These caps apply to your contributions; employer matching is on top.

Roth or traditional 401(k)?

Many plans let you choose:

• Traditional 401(k): contributions lower your taxable income now; withdrawals are taxed in retirement.
• Roth 401(k): contributions are after-tax now, but qualified withdrawals are tax-free later.

The logic mirrors the Roth vs. Traditional IRA decision: Roth tends to favor those who expect higher taxes later, traditional those in a high bracket now.

Don't stop at the match if you can help it

The match is the floor, not the goal. Because of decades of compound growth, the difference between contributing 6% and 15% over a career can be hundreds of thousands of dollars. Even small increases compound dramatically.

See your 401(k) grow

Use the 401(k) calculator to project your balance at retirement based on your contribution rate, employer match and expected returns — and see exactly how much a 1% increase adds over time. For the bigger picture of your total target, see how much you need to retire.