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401(k) basics
How much should I contribute to my 401(k)?
How much should I contribute to my 401(k)?

There’s no one-size-fits all answer to how much you should contribute to your 401(k), but here are some general points to consider.

Updated over a week ago

The amount you should contribute to a 401(k) is ultimately up to you and should be based on your unique situation. However, there are some general guidelines that can be helpful to consider.

First and foremost, if you can, it’s important to take advantage of any employer matching contributions. As the name implies, an employer match means your company will match a portion of what you contribute personally up to a certain percentage. Contributing enough to receive the full match is a great way to maximize retirement savings by earning free money from your employer.

In addition, as a general rule of thumb, financial professionals often recommend contributing at least 10% to 15% of your income toward retirement savings. However, the exact amount you save should depend on factors such as your:

  • Personal financial situation

  • Age and time until you retire

  • Investment objectives

  • Outside investment and retirement accounts

  • Prior investment experience

  • Tax bracket

If it fits in your overall financial strategy and budget, you can consider taking full advantage of the tax deferral benefits the IRS provides and contribute up to the annual deferral limit every year.

Overall, there’s no one-size-fits all answer to how much you should contribute to your 401(k). Simply start at a rate that matches your comfort level and goals. And if circumstances change, you can increase or decrease your contribution rate at any time.

This information is general in nature and is for informational purposes only. It should not be construed as investment advice. Investing involves risk and investments may lose value. Consult a qualified financial adviser.

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