By EveryFinance Editorial Team · September 29, 2026 · 7 min read
Your 401(k) is likely to be your largest source of retirement savings, and the percentage you choose on the enrollment form has an outsized effect on how much you'll have. Here's how to pick a number, and what different choices add up to over a career.
If your employer matches contributions, contribute at least enough to get all of it. A typical match is "50% of your contributions, up to 6% of pay." That means contributing 6% earns an extra 3% from your employer, an instant 50% return before any investment growth. Some employers match dollar-for-dollar.
Contributing less than the match limit leaves free money unclaimed. On a $75,000 salary with a 50%-up-to-6% match, contributing 3% instead of 6% gives up $1,125 of employer money every year.
A common guideline is to save 15% of your pre-tax income for retirement, including your employer's match. With a 3% match, that means contributing about 12% yourself. It's a target for someone starting in their 20s or early 30s; starting later generally means saving more.
If 15% isn't realistic right now, start with the match and increase your contribution by 1 percentage point each year, or each time you get a raise. Many plans can do this automatically.
Here's a 30-year-old earning $75,000 with $25,000 already saved, getting 3% raises a year, earning 7% a year on investments, and receiving a 50% match on contributions up to 6% of pay, projected to age 65. "Today's dollars" adjusts for 2.5% inflation a year.
Going from 3% to 6% raises the result by more than 70%, because the extra 3% also unlocks the rest of the employer match. Each step after that still adds hundreds of thousands of dollars by retirement.
The balances look large because they're in future dollars; the inflation-adjusted column is the better guide to what the money will buy. Combined with Social Security, the 10% or 15% scenarios would replace a meaningful share of this worker's pre-retirement income.
The same worker contributing 10% with nothing saved yet ends up with very different amounts depending on when they start:
Waiting ten years from age 25 to 35 cuts the inflation-adjusted result by about 43%, because the earliest contributions have the most time to compound.
The higher catch-up for ages 60 to 63 comes from the SECURE 2.0 Act. See our contribution limits page for IRA and HSA limits too.
After getting the full match, many people weigh a few options for their next dollar:
A traditional 401(k) contribution reduces your taxable income, so your take-home pay drops by less than you contribute. For a single filer earning $75,000 and paid every two weeks, each 1% of pay contributed is about $28.85 per paycheck but reduces take-home pay by only about $22.50, because it lowers federal income tax (state tax savings would make the difference larger). Try it with the paycheck calculator.
At minimum, enough to get your employer's full match. Beyond that, a widely used target is 15% of your pay including the match. If that isn't possible yet, raising your contribution by 1 percentage point a year is a painless way to get there.
$24,500 in employee contributions. If you're 50 or older you can add an $8,000 catch-up contribution, or $11,250 if you turn 60, 61, 62 or 63 during the year. Employer contributions count toward a separate total limit of $72,000.
Traditional contributions reduce your taxes now and are taxed when withdrawn; Roth contributions are taxed now and withdrawn tax-free. Roth tends to be better if you expect a higher tax rate in retirement than today, and traditional if you expect a lower one. Many people split contributions between the two.
Written by EveryFinance Editorial Team
Our guides are researched from primary sources such as IRS publications and CFPB guidance, and reviewed whenever the underlying rules change.
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