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

"How much should I put in my 401(k)?" If you've asked this question, you're already ahead of the curve. A lot of people never even think about their contribution rate - they just accept whatever default their employer set and move on. But the difference between contributing 3% and 15% over a 30-year career is staggering. Let's walk through the different levels and help you find the right number for your situation.

The Minimum: Get Your Full Employer Match

If your employer offers a 401(k) match, your absolute bare minimum contribution should be enough to get the full match. Anything less is leaving free money on the table. Period.

Let's say your employer matches 50% of your contributions up to 6% of your salary. You earn $75,000. Here's what that looks like:

• You contribute 6% ($4,500): Employer adds $2,250. Total annual contribution: $6,750.
• You contribute 3% ($2,250): Employer adds $1,125. Total annual contribution: $3,375. You're missing out on $1,125 per year in free money.
• You contribute 0%: Employer adds $0. You're walking away from $2,250 in free money every single year.

That $2,250 in missed matching, invested over 30 years at 7% returns, grows to roughly $213,000. Missing the match for a decade alone costs you about $33,000 in missed contributions plus tens of thousands more in lost growth.

The Target: 15% of Gross Income

Most financial advisors recommend saving 15% of your gross income for retirement, including your employer match. This target comes from research showing that someone who starts saving at 25 and maintains a 15% savings rate should be able to retire comfortably by their mid-60s.

On a $75,000 salary, 15% means $11,250 per year, or about $937 per month. If your employer matches 3% ($2,250), you'd need to contribute 12% ($9,000) on your own to hit the 15% target.

That $11,250 per year, invested for 30 years at 7% returns, grows to approximately $1,065,000. Bump it up to 35 years and you're looking at about $1,580,000. Time really is the most powerful variable.

The Stretch Goal: Max It Out

The 2025 401(k) contribution limit is $23,500 (or $31,000 if you're 50+). Maxing out your 401(k) is ideal if you can afford it. On a $100,000 salary, that's 23.5% of your gross income going to retirement savings.

Let's see the long-term difference:

• $23,500/year for 30 years at 7%: approximately $2,225,000
• $15,000/year for 30 years at 7%: approximately $1,420,000
• $6,000/year for 30 years at 7%: approximately $568,000

The person maxing out ends up with nearly four times as much as the person contributing $6,000. Same timeline, same returns, completely different outcome.

The Tax Math: It Costs Less Than You Think

One reason people hesitate to increase their 401(k) contributions is the perceived hit to their paycheck. But because traditional 401(k) contributions are pre-tax, the actual reduction in take-home pay is smaller than you'd expect.

Say you earn $80,000 and you're in the 22% federal tax bracket. Contributing an extra $100 per paycheck (biweekly) to your pre-tax 401(k) doesn't cost you $100 in take-home pay. It costs you about $78, because that $100 comes out before federal taxes.

The breakdown: $100 contribution reduces your taxable income by $100. At a 22% tax rate, that saves you $22 in federal taxes. So your take-home pay only drops by about $78, but you've saved $100 for retirement. Factor in state taxes and the effective cost could be even lower.

How to Increase Your Contribution Rate

If you're currently contributing 4% and the goal is 15%, don't try to jump there all at once. That kind of sudden change to your paycheck is hard to sustain. Instead, use one of these gradual approaches:

The 1% Per Year Method

Increase your contribution rate by 1% each year. If you're at 4% now, you'll be at 15% in 11 years. Most people barely notice a 1% change, especially if it coincides with an annual raise.

The Half-a-Raise Method

Every time you get a raise, put half of it toward your 401(k). If you get a 3% raise, increase your contribution by 1.5%. Your take-home pay still goes up, so it never feels like a sacrifice.

The Auto-Escalation Option

Many 401(k) plans now offer automatic escalation. You set it once and your contribution rate increases by 1% each year until it hits a cap you choose. Set it and forget it.

See the Impact

Use the calculator below to see exactly how different contribution rates affect your projected retirement balance. Try adjusting your contribution percentage and see the difference between 6%, 10%, 15%, and maxing out.

What About Other Priorities?

Retirement savings don't exist in a vacuum. You also need to handle other financial priorities. Here's a general order of operations:

1. Build a small emergency fund ($1,000 to start).
2. Contribute enough to get your full employer match.
3. Pay off high-interest debt (credit cards, personal loans above 7-8%).
4. Build a 3-6 month emergency fund.
5. Increase 401(k) to 15% (or add a Roth IRA to the mix).
6. Max out 401(k) and IRA if you can.
7. Invest in a taxable brokerage account for anything beyond that.

If you have high-interest debt, it can make sense to contribute just enough for the match, aggressively pay down the debt, and then ramp up your 401(k). The employer match is essentially a guaranteed 50-100% return, which beats any credit card interest rate. But credit card interest at 20%+ beats the expected 7-10% stock market return, so paying that off before maxing the 401(k) makes mathematical sense.

Age-Specific Guidance

Where you are in your career affects the urgency:

• 20s: Even 10% is great at this age. You have 35-40 years of compounding ahead. The money you save now is worth the most.
• 30s: Aim for 15% including the match. If you're behind, push to catch up.
• 40s: This is when 15% becomes a must, not a nice to have. If you haven't been saving much, consider 20% or more.
• 50+: Take advantage of catch-up contributions ($7,500 extra per year). Max out if possible. Every dollar counts more now.

The Bottom Line

At minimum, contribute enough to get your full employer match. Aim for 15% of gross income including the match. Max out if you can. If none of those feel doable right now, start where you are and increase by 1% per year. The math is clear: every percentage point matters, and starting early matters even more. Don't overthink it. Just start, and keep increasing.