How Much Should I Contribute to My 401(k)?

Once you set up your retirement plan at work, the next natural question is: How much to contribute to a 401(k)? While there’s no one right answer for how much to save in your employer-sponsored plan, there are some important guidelines that can help you set aside the amount that’s right for you, such as the tax implications, your employer match (if there is one), the stage you’re at in your career, your own retirement goals, and more.

Here’s what you need to think about when deciding how much to contribute to your 401(k).

401(k) Contribution Limits for 2025 and 2026

Like most tax-advantaged retirement plans, 401(k) plans come with caps on how much you can contribute. The IRS puts restrictions on the amount that an employee can save in their 401(k); plus there is a cap on total employee-plus-employer contributions.

Here’s a look at what you can contribute in 2025 and 2026, including catch-up contributions for those 50 and older and an extra catch-up for those ages 60 to 63, thanks to SECURE 2.0.

Under a new law regarding catch-up contributions that went into effect on January 1, 2026 (as part of SECURE 2.0), individuals aged 50 and older who earned more than $150,000 in FICA wages in 2025 are required to put their 401(k) catch-up contributions into a Roth 401(k) account. With Roth accounts, individuals pay taxes on contributions upfront, but can make qualified withdrawals tax-free in retirement.

How Much Should You Put Toward a 401(k)?

Now that you know the retirement contribution limits, you can start to determine how much to contribute to your 401(k). Here are some guidelines, based on the stage of your career, to keep in mind as you’re deciding on your contribution amount.

When You’re Starting Out in Your Career

At this stage, you may be earning a lower salary and you also likely have bills to pay for, like rent, food, and maybe student loans. So you may decide to contribute a smaller amount to your 401(k). If you can, however, contribute enough to get the employer match, if your employer offers one.

Here’s how it works: Some employers offer a matching contribution, where they “match” part of the amount you’re saving and add that to your 401(k) account. A common employer match might be 50% up to the first 6% you save.

In that scenario, let’s say your salary is $50,000 and your employer matches 50% of the first 6% you contribute to your 401(k). If you contribute up to the matching amount, you get the full employer contribution. It’s essentially maximizing your total employer compensation.

To give an example, if you contribute 6% of your $50,000 salary to your 401(k), that’s $3,000 per year. Your employer’s match of 50% of that $3,000 comes to $1,500, for a total of $4,500.

As You Move Up in Your Career

At this point you may have a lot of financial obligations such as a mortgage, car payments, and possibly child care. It might be tough to also save for retirement, but it’s important not to fall behind. Try to contribute a little more to your 401(k) each year if you can — even 1% more annually can make a difference.

That means if you’re contributing 6% this year, you would contribute 7% next year. And the year after that you’d bump up your contribution to 8%, and so on until you reach the maximum amount you can contribute. Some 401(k) plans have an auto escalation option that will automate the extra savings for you, to make the process even easier and more seamless. You can check your plan to see if it has such a feature.

As You Get Closer to Retirement

Once you reach age 50, you may want to figure out how much you might need for retirement so you have a specific goal to aim for. To help reach your goal, you may want to consider maxing out your 401(k) at this time and also to make catch-up contributions if necessary. Maxing out your 401(k) means contributing the full amount allowed — see the chart above for the specific limits based on your age.

With the potential of compounding returns, maxing out your 401(k) until you reach full retirement age may go a long way to helping you achieve financial security in retirement.

The Impact of Contributing More Over Time

The earlier you start saving for retirement, the more time your money will potentially have to grow, thanks to the potential power of compounding returns, as mentioned above.

In addition, by increasing your 401(k) contributions each year, even by just 1% annually, the savings could add up. For instance, consider a 35-year-old making $60,000 who contributes 1% more each year until their full retirement age of 67. Assuming a 5.5% annual return and a modest regular increase in salary, they could potentially save more than an additional $85,000 for retirement.

That’s just an example, but you get the idea. Increasing your savings even by a modest amount over the years may be a powerful tool in helping you realize your retirement goals.

Factors That May Impact Your Decision

In addition to the different stages of your life and career, it’s also wise to think about taxes, your employer contribution, your own goals, and more when deciding how much to contribute to your 401(k).

1. The Tax Effect

A key fact to remember about 401(k) plans is that they are tax-deferred accounts, and they are considered qualified retirement plans under ERISA (Employment Retirement Income Security Act) rules.

That means the money you set aside is typically deducted from your paycheck pre-tax, and it grows in the account tax free — but you pay taxes on any money you withdraw. (In most cases, you’ll withdraw the money in retirement at age 59 ½ or older, but there are some cases where you might have to take an early 401(k) withdrawal. In either case, you’ll owe taxes on those distributions.)

The tax implications are important because the money you contribute to your 401(k) effectively reduces your taxable income for that year, and may lower your tax bill and potentially put you in a lower tax bracket.

2. Your Earning Situation

One rule-of-thumb is to save at least 10% of your annual income for retirement. But 10% is only a general guideline. In some cases, depending on your income and other factors, 10% may not be enough to get you on track for a secure retirement, and you may want to aim for more than that to make sure your savings will last given the cost of living longer.

For instance, consider the following:

•   Are you the sole or primary household earner?

•   Are you saving for your retirement alone, or for your spouse’s/partner’s retirement as well?

•   When do you and your spouse/partner want to retire?

If you are the primary earner, and the amount you’re saving is meant to cover retirement for two, that’s a different equation than if you were covering just your own retirement. In this case, you might want to save more than 10%.

However, if you’re not the primary earner and/or your spouse also has a retirement account, such as an individual retirement account (IRA), setting aside 10% might be adequate. For example, if the two of you are each saving 10%, for a combined 20% of your gross income, that may be sufficient for your retirement needs.

All of this should be considered in light of when you hope to retire, as that deadline would also impact how much you might save as well as how much you might need to spend.

3. Your Retirement Goals

What sort of retirement do you envision for yourself? Even if you’re years away from retirement, it’s a good idea to sit down and imagine what your later years might look like. These retirement plans can inform the amount you want to save.

Retirement goals may include traveling, moving to another country, starting your own small business, offering financial help to your family, leaving a legacy, and more.

You may also want to consider health factors, since health-care costs and the possible need for long-term care can be a big expense as you age.

4. Do You Have Debt?

It can be hard to prioritize saving if you have debt. You may want to pay off your debt as quickly as possible, then turn your attention toward saving for the future.

The reality is, though, that debt and savings are both priorities and need to be balanced. It’s not ideal to put one above the other, but rather to find ways to keep saving even small amounts as you work off your debt. Even a small contribution, made regularly, can add up over time.

Then, as you pay down the money you owe — whether from credit cards or student loans or another source — you can take the cash that frees up and add that to your savings.

The Takeaway

Many people wonder how much to contribute to a 401(k). There are a number of factors that will influence your decision. First, there are the contribution limits imposed by the IRS, including catch-up contributions for those over 50. Then there are factors specific to you: where you are in your career, your existing financial obligations, and your personal retirement goals.

While few people can start their 401(k) journey by saving the full contribution amount, it’s wise, if possible, to contribute enough to get your employer’s match early in your career, then bump up your contributions over time as your financial situation allows.

Another option is follow a common guideline and save 10% of your income beginning as soon as you can swing it. From there, you can work up to saving the max. And remember, you don’t have to limit your retirement savings to a 401(k). The key is to put as much money as you can away for the future.

Of course, a main determination of the amount you need to save is what your goals are for the future. By contemplating what you want and need to spend money on now, and the quality of life you’d like to have in retirement, you can begin to calculate how much you’ll need to save to achieve that.

Prepare for your retirement with an individual retirement account (IRA). It’s easy to get started when you open a traditional or Roth IRA with SoFi. Whether you prefer a hands-on self-directed IRA through SoFi Securities or an automated robo IRA with SoFi Wealth, you can build a portfolio to help support your long-term goals while gaining access to tax-advantaged savings strategies.

FAQ

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

If you can, try to contribute at least enough of each paycheck to get your employer’s matching funds, if they offer a match. So if your employer matches 6% of your contributions, aim to contribute at least 6% of your paycheck.

What percent should I put in my 401(k)?

One common rule of thumb is to contribute at least 10% of your income to your 401(k) to help reach your retirement goals. Just keep the annual 401(k) contribution limits in mind so you don’t exceed the yearly maximum.

Is 10% too much to contribute to 401(k)? What about 20%?

Contributing at least 10% to your 401(k) is a common rule of thumb to help save for retirement. If you are able to contribute 20%, it can make sense to do so. Just be sure not to exceed the annual 401(k) contribution limits.