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Your employer-sponsored 401(k) is a simple, automated, and tax-advantaged way to save for retirement. There is no question you should use a 401(k) if your employer provides one. What you may need help deciding, though, is how much you should contribute to enable a comfortable retirement.
Experts recommend saving 10% to 15% of your income to your 401(k) but this can vary depending on your situation. Let's walk through the factors to consider.
Learn more: What is a 401(k)? A guide to the rules and how it works.
How much should I have in my 401(k)?
Your per-paycheck 401(k) deposit is typically defined in terms of a contribution rate. This is the amount of the deposit expressed as a percentage of your gross pay. Gross pay is the amount you earn before taxes and deductions.
How much you should contribute to your 401(k) depends on various factors. An early consideration is the IRS annual contribution limits. How old you are when you start contributing, whether your employer provides matching contributions, and how well your current salary covers expenses are also factors.
Learn more: How a 401(k) match works and why you should seek it out
Factor 1: IRS annual 401(k) contribution limit
The maximum allowed 401(k) contribution is set by the IRS annually. In 2026, the limit is $24,500.
Older savers have higher limits, by way of catch-up and super catch-up contributions.
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Catch-up contributions: These apply to savers over 50. The 2026 catch-up contribution limit is $8,000, an increase of $500 from 2025. This amount adds to the standard limit, so savers over 50 can contribute up to $32,500 in 2026.
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Super catch-up contributions: Savers aged 60 to 63 may have a larger catch-up amount if their plan supports super catch-ups. The 2026 super catch-up is $11,250, which remains unchanged from 2025. This brings the total allowed 2026 contribution for this age group to $35,750.
Starting in 2026, if you make more than $145,000 annually in wages subject to Social Security taxes, catch-up contributions must be Roth contributions. Roth contributions are made with after-tax funds but qualified withdrawals in retirement are tax-free. Most, but not all, 401(k) plans offer Roth contributions.
401(k) contribution limits, including catch-up limits, are adjusted each year to account for inflation.
Learn more: IRS raises 401(k) contribution limits for 2026. Here's how much.
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Factor 2: Your age when you start saving
Your potential to build wealth in your 401(k) is directly linked to your timeline. The longer your timeline, the more time there is for your invested funds to grow.
"A person who can start saving in their 20’s could conceivably have a seven-figure net worth in their 40’s or 50’s. A person who waits to start doing this in their 40’s or 50’s will never be able to catch up to the level that someone who starts in their 20’s can achieve." -Chris Orestis, president at The Retirement Genius.
Say you begin saving to your 401(k) in your 20s. In that case, a 6% contribution rate is a great starting point, according to Lisa A. Hojnacki, participant services coordinator and team lead at wealth manager Greenleaf Trust. Hojnacki also recommends increasing that rate by 1% annually until you reach the maximum allowed contribution.
If you get a later start on retirement saving, say, in your 40s or 50s, Hojnacki recommended contributing at least 15%, up to the maximum allowed contribution when possible.
Learn more: Retirement planning: A step-by-step guide
Factor 3: Your access to employer-matching contributions
Many employers offer matching contributions, which are free 401(k) deposits paid for by your employer. They require you to contribute some amount, which the employer will “match” up to 100%.
As a common practice example, according to Fidelity, the employer might match 100% of your contributions up to 3%, plus 50% of your contributions on the next 2%.
Under these rules, you would contribute at least 5% of your salary to get the full employer match. If you make $60,000 annually, the math looks like this:
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Your 5% contribution will be $3,000 annually.
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Your employer match on the first 3% of your contribution is $1,800, or 3% of $60,000.
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The remaining employer match is $600, which is 2%, or $1,200, divided by two.
In other words, if you contribute $3,000 annually, you get $2,400 in free contributions, paid for by your employer.
Learn more: How to do a 401(k) rollover and what to consider
Factor 4: Your salary relative to expenses
401(k) contributions lower your net pay, so they must be budgeted. This can be challenging if your income barely covers your expenses.
In this scenario, experts recommend contributing any dollar amount you can afford.
"Starting with anything is better than nothing," explained Hallie Kraus, CFP, CRPC, and financial planner with The Humphries Group. If saving 15% of your income feels impossible, start with whatever you can manage — say, $25 or $50 monthly. Even small amounts, if invested, can compound and grow over time. The wealth momentum you generate can be a motivator to raise your contributions as your income increases.
Tips for raising your contribution rate
Your budget may require you to start with a lower contribution rate and work up to 15% or 20% over time. The following strategies can help you implement those contribution increases.
Use auto-escalation
Some 401(k) plans have an auto-escalation feature that increases your contribution rate automatically. You set the terms, which include the amount of the increase and the cadence. It makes sense to plan the increase to happen around the time you expect an annual raise.
Hold lifestyle spending steady
You can use pay increases to raise your 401(k) contributions instead of expanding your lifestyle, according to Saïd Israilov, CFP, financial planner and wealth manager at Israilov Financial. Resisting the urge to upgrade your home or car after a big raise can help you secure a more comfortable retirement.
Trim spending
Vanessa Welch, vice president for financial insights at wealth manager Empower, recommends reviewing your spending to find places to cut back. "By reducing unnecessary expenses, you'll have more to invest and will make real progress over time," Welch explained.
Remember too, that your 401(k) contributions are deducted from your pay before income taxes are calculated. As a result, the reduction in your take-home pay after raising your contribution will be less than the increase.
Learn more: 403(b) vs. 401(k): Similarities, differences, advantages, and disadvantages
401(k) balance by age
You may also be interested in setting milestones for your 401(k) balance so you know your savings are on track. The process of setting milestones is an inexact science, however. One approach is to set a saving goal to reach by retirement and then work backwards to identify milestones for age 30, 40, 50, and so on. But knowing how much wealth you need to retire is hard to predict.
Learn more: How much should you have saved for retirement by 30, 40, or 50?
Pam Krueger, founder and CEO of wealth manager Wealthramp, recommended targeting a retirement balance equal to six to 10 times your gross salary. If that is the end goal, your 401(k) milestones might be:
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401(k) target balance in your 20s: One to two times your gross salary. If you make $60,000, for example, the target would be $60,000 to $120,000.
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401(k) target balance in your 40s: Three times your gross salary, or $180,000 if you earn $60,000 annually.
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401(k) target balance in your 50s: Six times your gross salary, or $360,000 on a $60,000 salary.
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401(k) target balance at retirement: Ten times your gross salary, or $600,000 on $60,000 in annual earnings.
This advice comes with two caveats. One, the target balances will increase if you expand your lifestyle as your salary grows. Expanding your lifestyle in your working years ultimately increases the cost of your retirement.
Two, these are guidelines only. There are many factors to consider when defining your target retirement balance.
As Thomas Buckingham, chief growth officer at Nassau Financial Group explained, "There is no one dollar amount of assets or ratio to salary that will work for everyone." A few factors to consider are your Social Security and pension benefits, living expenses, your discretionary spending habits, and whether you own a home.
How much to contribute? As much as possible
When deciding how much to contribute to your 401(k), look to save as much as you can afford. Ideally, you save enough to capture your full employer-matching contributions and commit to increasing your contribution rate annually. As you get closer to retirement age, you can adjust your plan to suit your future lifestyle needs.
401(k) contribution FAQs
I am 25 and just started my first corporate job. How much should I contribute to my 401(k) if my employer matches 3%?
At a minimum, you should contribute 3% to receive all your employer match. If you can manage it, aim for a higher contribution rate of 6% or 7%. This gives you a solid start on retirement wealth. Remember that the funds you contribute early in your career have the most growth potential, because they will be invested the longest. Use that to your advantage by contributing as much as you can from the start.
I am in my 40s and haven't saved at all. How much should I contribute to my 401(k)?
If you get a late start on retirement contributions, aim to contribute 15% of your income — or as much as your budget and the annual contribution limits will allow.
The annual contribution limits may be restrictive if you earn a higher-than-average income. In that case, consider making the maximum 401(k) contribution and saving additional funds to a traditional IRA or taxable brokerage account. The IRA contributions may not be tax-deductible, but taxes on the investment earnings will be deferred until retirement.
How much can I contribute to my 401(k) in 2026?
For savers younger than 50, the IRS allows 401(k) contributions totaling up to $24,500 in 2026. Savers 50 and older can contribute up to $32,500. Those aged 60 to 63 whose plans support super catch-up contributions can deposit up to $35,750 in their 401(k)s.
Read More
How a 401(k) match works and why you should seek it out
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401(k) vs. IRA: The differences and how to choose which is right for you
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How to do a 401(k) rollover and what to consider
Learn what to consider before doing a 401(k) rollover, what the risks are, and what steps you should take to move your retirement funds to a new account.
403(b) vs. 401(k): Similarities, differences, advantages, and disadvantages
403(b)s and 401(k)s are both tax-advantaged retirement accounts, but a 403(b) is usually provided by schools and charities, while private companies offer 401(k)s.
