Figuring out how much to put in a 401(k) is one of the smartest financial moves you can make. It’s like planting a money tree that’ll grow over time, thanks to compound interest and potential employer matching.
In this article, we’ll walk you through how much to put in your 401(k) per paycheck, considering the ideal scenario for you and the adjustments that come as you age. (Spoiler alert: Your contributions should start small in your 20s and grow bigger with time.) Plus, we’ll throw in some practical tips to help you maximize your contributions, no matter where you are in life.
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How much to put in 401(k): What you can do
The IRS sets annual contribution limits for 401(k)s. For 2024, you can contribute up to $23,000 if you're under 50, and if you're 50 or older, you get an additional “catch-up” contribution of $7,500—meaning you can stash away $30,500 annually.
But how does this translate into monthly contributions? If you're aiming to max out your contributions, here’s how it breaks down per month:
- Under 50: $1,916.67 per month
- 50 and older: $2,541.67 per month
Now, these are the upper limits—few people, especially in their 20s or 30s, can afford to contribute that much. The key is to balance your contributions with your financial situation.
How much to put in 401(k): What you should do
Knowing what you can contribute is one thing, but figuring out how much you should contribute is where things get personal.
“If your employer will be matching a maximum of 6% to your 401(k), you should contribute the highest financially feasible amount within the federal limit,” says financial advisor Ethan Richardson.
There are two ways to look at this. From an overall retirement investing perspective, if your employer is matching 6%, your 401(k) contribution should be 9%—bringing your total monthly contribution to 15%. Why 15%? Because by contributing enough to receive the full match, you're effectively increasing your retirement savings by 50%.
The other way to figure out how much money to put in 401(k) relies on these factors:
- Employer matching: If your employer offers a match, you should at least the same percentage to get the full match. It’s free money! If they match up to 5%, for example, contribute at least 5% of your salary.
- Your budget: In your 20s or early 30s, you may be juggling student loans, rent, and other expenses. Contributing the ideal 15% might be tough. Start with a more manageable percentage, like 5% or 6%, and increase your contributions over time (say, whenever you get a raise, or once you pay off a car or student loan)..
- Other financial goals: Don’t forget to save for short-term goals, too. It’s OK to contribute a bit less to your 401(k) if you’re also building an emergency fund or saving for a down payment on a house.
Is maxing out a 401(k) worth it?
Maxing out your 401(k) can be worth it if you have the income to do so and have already met other financial goals, like building an emergency fund or saving for short-term needs.
Also good to know: Should I Max Out My Roth IRA? When It's a Good Idea—and When It's Not
What happens if I put too much in my 401(k)?
If you over-contribute to your 401(k), the excess amount will be taxed twice—once when you put it in and again when you withdraw it. Definitely not worth it, so be sure to track your contributions and stay within the IRS limits.
How much to put in 401(k) by age
As you progress in your career and your income increases, the answer to “How much to put in a 401(k) per month?” should grow, too. Here’s a rough guide for how much you might aim to contribute at different stages of life:
How much to contribute to your 401(k) in your 20s
Start by contributing enough to get your employer’s full match—if that’s 5% or 6%, great! If you can stretch to 10%, even better. The earlier you start, the more time your money has to grow.
How much to contribute to 401(k) in your 30s:
By your 30s, you should aim to contribute 10-15% of your income to your 401(k). At this stage, you might also have room to focus on other savings goals (like buying a home), but increasing your retirement savings is still crucial. “The key is to increase your contributions over time, especially when you get a raise,” says financial planner Steven Kibbel. “Try bumping up your contribution rate by 1% or 2% each year.”
How much to put in 401(k) in your 40s and beyond
At this point in your career, you should be striving to max out your contributions if possible, or at least get close to the 15% mark. Ideally, by your mid-40s, you’ll have saved 3x to 4x your annual salary in your 401(k).
How to maximize your 401(k) contributions
While we can’t tell you exactly how much to put in a 401(k) per paycheck, we can encourage you to maximize your contributions to get the best buck for your dollar. Whether you're just starting out or catching up, here are some tips to help you get the most out of your 401(k):
Take advantage of employer matching
Yep, we’ll keep repeating this because it’s that important: If your employer offers to match contributions, aim to contribute at least enough to get the full match. For example, if they match 50% of the first 6% you contribute, that’s like getting an extra 3% of your salary—free!
Increase your contributions slowly
You don’t have to go all in from the start. Increase your contribution by 1% or 2% each year, or every time you get a raise. You’ll hardly notice the difference in your paycheck, but it’ll make a big difference to your future.
Use bonuses and tax refunds
Consider putting some (or all) of any bonuses or tax refunds into your 401(k). Since this money isn’t part of your regular paycheck, you won’t miss it, but it will give your retirement savings a significant boost.
Automate your contributions
Most 401(k) plans allow you to automatically deduct contributions from your paycheck, which makes it easier to stay consistent. You won’t be tempted to skip a month.
Take more risks in your 20s
In your 20s, you have a long time horizon until retirement, which means you can afford to take on more risk for potentially higher rewards. “I typically advise young investors to focus on growth-oriented options,” Kibbel says. “These carry more risk, but they also offer the potential for higher returns over the long haul.”
A mix of domestic and international stocks, bonds, and other assets can help balance risk and reward, ensuring that you’re not overly reliant on any one type of investment. As you get closer to retirement, you can gradually shift to a more conservative strategy by adding bonds and other low-risk investments.
Many 401(k) plans offer target-date funds, which automatically adjust your investment mix as you approach retirement. These funds start with a higher allocation of stocks and shift to more conservative investments over time, making them a great hands-off option for young investors.
Bottom line
Knowing how much to put in 401(k) a month is one of the most powerful steps you can take toward financial security. Even if you start small, the key is consistency and increasing your contributions over time. With the right strategy, you can balance saving for retirement while managing your other financial goals—setting yourself up for a more secure future.
FAQs
What percentage should I contribute to my 401(k)?
A good rule of thumb is to contribute 15% of your income, but this can include your employer's match. If 15% is too high, start at 5% or 6% and work your way up.
What percentage should I contribute to my 401(k) at age 25?
At age 25, aim to contribute around 10-15% of your income to your 401(k). If that’s not feasible, try to at least contribute enough to take advantage of your employer’s match.
How much should I have in my 401(k) at 45?
By 40, you should aim to have around 2x to 3x your annual salary saved in your 401(k). This ensures you're on track for a comfortable retirement.
Should I contribute to a 401(k) if I have debt?
It depends. If your debt has high-interest rates (like credit card debt), you might want to focus on paying it off first. But if it’s low-interest debt (like federal student loans), you can likely afford to contribute to your 401(k) while paying off debt.