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

By Justin · October 30, 2026

It's your first open enrollment, or maybe your second week at your first real job, and HR has sent you a link. Somewhere between the dental plan and the life insurance beneficiary form, there's a box: Contribution rate: ___%. The cursor blinks. The deadline is Friday. Everyone around you seems to know what to type, and you're fairly sure nobody's going to explain it.

So most people guess. They type whatever the form suggests, or the number a coworker mentioned at lunch, or a 0, because rent is due and the paycheck already feels small.

Here's the short answer, and then we'll earn it: put in at least enough to get your employer's full match, then work your way toward about 15% of your pay, counting the match. If that's more than your budget can carry right now, start where you can and raise it a point at a time. That's the whole strategy. The rest of this article is why it works and how to find your own number.

What is a 401(k), in plain English?

A 401(k) is a retirement account you get through work. You pick a percentage of your paycheck, your employer sends that slice into the account before the money ever reaches your bank, and it gets invested in funds you choose from a short menu. It's named after the section of the tax code that created it, which tells you how much thought went into the branding.

The draw is the tax break. With a traditional 401(k), the money goes in before income tax, and you pay the tax when you take it out in retirement. Many plans also offer a Roth 401(k), which flips that: you pay the tax now and take the money out tax-free later. We'll come back to which one to pick.

There's a trade for that tax break. Pull money out before age 59½ and you'll generally owe income tax plus a 10% penalty, with a few exceptions. Think of it as a pile of money with a lock on it until retirement.

The lock isn't a flaw. It's the point.

Start with the employer match: the raise you have to claim

An employer match is money your employer adds to your 401(k) when you put money in. Common formulas look like "50 cents for every dollar you contribute, up to 6% of your pay" or "dollar for dollar, up to 4%." The key phrase is "up to": you only get the full match if you contribute at least that percentage yourself.

Say you earn $48,000 a year and your employer matches 50% of what you put in, up to 6% of pay. Contribute 6%, which is $240 a month, and they add $120 a month, or $1,440 a year.

Contribute 3% and they add only $60 a month, so you leave $720 a year on the table. That's a 50% return the moment the money lands, before the market does a single thing. I don't know of any investment that reliably promises that.

To find your formula, look in your benefits portal or the plan's summary documents, or ask HR one question: "What's the match, and how much do I have to put in to get all of it?"

One fine-print word to know: vesting, which is how long you have to stay before the employer's money is fully yours. What you contribute yourself is always 100% yours. The match might vest over a few years, so if you leave early you could forfeit part of it. Take it anyway: part of a match still beats none.

The match is a raise. It just doesn't show up unless you sign for it.

How much should you contribute after the match?

The benchmark most people quote comes from Fidelity: save at least 15% of your pre-tax pay for retirement each year, and the employer match counts toward it. So with that 50%-up-to-6% match, your employer is putting in 3% of pay, and you'd contribute 12% to hit 15%. No match at all? Fidelity still says 15%, all from you.

That figure assumes you start around 25 and retire around 67. Start later and the target goes up, which is the honest argument for not waiting. (If you're reading this at 40 instead of 24, Behind on Retirement Savings? is written for exactly where you are.)

I'm not going to pretend 15% fits everyone. If you want to retire early, it's probably low. If you'll get a pension, it may be more than you need. If you want to see what a savings rate actually buys you, the FIRE calculator lets you save by "% of income": choose that option, enter your pay, try 6%, then 10%, then 15%, and watch how the age you could reach your number moves.

Fifteen percent is a destination, not an entry fee.

What 3%, 6% and 10% actually grow into

Here's what happens to that $48,000 earner with the 50%-up-to-6% match, starting at 25 and contributing until 65, at a steady 7% average yearly return:

Going from 3% to 6% costs you $120 a month and doubles the ending balance, because the employer's extra $60 comes along for the ride and compounds too, meaning its growth earns growth of its own. Of the roughly $890,000 at 6%, about $297,000 grew from the match alone. And every extra 1% of a $48,000 salary, just $40 a month, works out to about $49,500 by 65.

(These figures come from the Investment Simulator at a fixed 7% return, with a salary that never rises. Real markets don't move in a straight line and your pay will probably grow, so treat them as an illustration, not a forecast.)

To run it with your own numbers, open the Investment Simulator. Enter what you and your employer will add each month as the monthly contribution, set your years until retirement, and watch the end balance. Then nudge the contribution up by 1% of your pay and see what that single point is worth over your career.

Small percentages, big numbers. Time does the heavy lifting.

What if you can't afford 15% right now?

Most people starting out can't, and that's fine. The goal is the full match first and a climb after that, not a perfect number on day one.

Start by checking what a contribution really costs. Because traditional 401(k) money goes in before income tax, your paycheck shrinks by less than you put in. If your top federal tax bracket (the rate on your last dollars of income) is 12%, that $240 a month costs your take-home pay roughly $211. (Social Security and Medicare taxes still come out of it, and state taxes vary, so your exact figure will differ.)

Then find where the money comes from. The Monthly Expense Calculator walks you through your spending one category at a time and shows what's left after your take-home pay covers the bills. That leftover is your realistic starting point, not a number pulled from an article.

After that, put the climb on autopilot:

• Turn on automatic increases if your plan offers them. Many plans can raise your rate by one percentage point a year without you lifting a finger.
• Bump your rate with every raise. Do it before the bigger paycheck lands. You'll still take home more than before, and you never get used to the extra.
• Check whether you were signed up automatically. Under a 2022 law called SECURE 2.0, most 401(k) plans started since then have to enroll new hires automatically, starting at 3% to 10% of pay and rising a point a year until they reach at least 10%. If that's you, make sure the starting rate actually captures your full match.

Start at the match. Then climb one rung a year.

Should you pay off debt or fill your 401(k) first?

A rough order most people can live with:

1. Contribute enough to get the full match. A 50% or 100% instant return beats almost any interest rate you're paying.
2. Build a small cash cushion, so a flat tire doesn't end up on a credit card.
3. Pay down high-interest debt. Credit cards often charge 20% or more, and wiping that out is a guaranteed return no fund can promise.
4. Then raise your 401(k) rate toward 15%.

Low-rate debt, like a car loan or many student loans at a few percent, is a closer call, and it's perfectly reasonable to chip at it while you invest. Pay It Down lays out your debts side by side, shows how fast extra payments clear them, and compares paying the highest rate first with paying the smallest balance first. Once a debt is gone, its old payment is the easiest money you'll ever redirect into your 401(k).

Match first, then the expensive debt. The rest is a judgment call you're allowed to make.

Traditional or Roth 401(k)?

If your plan offers both, the question is simple to ask and impossible to answer with certainty: will your tax rate be higher now or in retirement?

Early in your career, your pay and your tax bracket are often as low as they'll ever be, which is why many people starting out lean toward Roth: pay the tax at today's lower rate and never pay it on the growth. If you expect your income to stay modest, or you're already in a high bracket, traditional can come out ahead.

I'm not a tax pro, and nobody can see your future bracket, including you. If you can't decide, splitting your contribution between the two is a perfectly respectable way of admitting that. Either one beats waiting while you think about it.

How much can you put in a 401(k) in 2026 and 2027?

For 2026, the IRS limit on what you can contribute yourself is $24,500 if you're under 50. Your employer's match doesn't count against that number.

The 2027 limit hadn't been announced when I wrote this at the end of October 2026. The IRS usually announces the next year's limits in November, and forecasters expect a modest bump, but I'd rather tell you it isn't out yet than hand you a guess.

Either way, the limit probably isn't your problem. At $48,000 a year, a full 15% is $7,200. For most people starting out, the limit is a ceiling you won't come close to.

What should you invest in once the money's in?

Your contribution rate is half the decision. The other half is what that money buys, and it's worth one careful look, because money parked in a cash or money market option (the plan's version of a savings account) barely grows at all.

If your plan's menu feels overwhelming, look for a target-date fund: a single fund labeled with a year close to when you'll retire, like 2065. It holds a mix of stocks and bonds and gradually shifts toward bonds as that year gets closer, so you don't have to rebalance it yourself. Check its expense ratio, the yearly fee shown as a percentage, since lower is usually better. If those terms are new, What Investing Actually Is covers stocks, bonds, index funds and fees in plain English.

Pick the fund once. Then leave it alone and let time work.

Frequently asked questions

What percentage should I contribute to my 401(k)?

At minimum, enough to get your employer's full match. A common long-term target is about 15% of your pre-tax pay, counting the match. If that's out of reach now, start at the match and raise your rate by a point each year or with each raise.

Is 6% enough for a 401(k)?

It's a solid start, especially if 6% is what it takes to get your full match. On its own, though, 6% plus a typical match lands short of the 15% many guidelines aim for. Treat it as a floor to build from, not a finish line.

Does the employer match count toward the 401(k) limit?

No. The 2026 limit of $24,500 covers only what you contribute yourself (more if you're 50 or older). Your employer's match is counted separately, under a much higher overall cap.

Can I change my 401(k) contribution any time?

Usually, yes. Most plans let you change your contribution rate during the year, not only at open enrollment, though it can take a pay period or two to kick in. Check your plan's rules in your benefits portal.

What happens to my 401(k) if I leave my job?

The money you contributed is yours and goes with you, along with any employer money that has vested. You can usually leave it in the old plan, roll it into your new employer's plan, or roll it into an IRA. Cashing it out before 59½ generally triggers income tax and a 10% penalty.

The box isn't carved in stone

That blinking cursor on the enrollment form feels like a permanent decision. It isn't. You can change the number next month, next raise, next year. What actually costs you is leaving it blank, or leaving it at 0 for a few years while you "figure it out," because those are the years compounding had the most time to work with.

So here's what I'd type, if it were me: enough to get the full match, today. Then set a reminder for your next raise and bump it a point. If you want a sense of where that road leads, the simulator will show you, and the expense calculator will tell you how much room your budget really has.

You don't need the perfect number. You need a number in the box, and a habit of making it bigger.