How Much Should You Contribute to Your 401(k)?
By Calqpro Editorial Team · April 20, 2026 · 7 min read
Most people undercontribute to their 401(k) — leaving free money on the table and robbing their future self of decades of compound growth. The right contribution amount depends on your income, age, employer match, and goals. Here's how to think through it.
Step 1: Always Capture the Full Employer Match
If your employer matches 50% of contributions up to 6% of your salary, and you earn $70,000, contributing 6% ($4,200/year) gets you $2,100 in free employer money. That's a 50% instant return before any investment gains. Nothing in personal finance beats this.
Not capturing the full match is the equivalent of turning down part of your salary. Do this first, before any other financial goal.
2026 401(k) Contribution Limits
| Category | 2026 Limit |
|---|---|
| Employee contribution (under 50) | $23,500 |
| Catch-up contribution (age 50+) | +$7,500 |
| Total including employer match | $70,000 |
How Much to Contribute by Age
A common benchmark: have 1× your salary saved by 30, 3× by 40, 6× by 50, 8× by 60 (Fidelity guidelines). To hit these targets, here's what most people need to contribute:
| Age | Suggested Contribution | Why |
|---|---|---|
| 20s | At least match + 10% total | Time is your biggest asset |
| 30s | 15% total (inc. match) | Balance retirement and other goals |
| 40s | 15–20% | Catch up if behind |
| 50+ | Max out ($31,000) | Use catch-up contributions |
The Real Cost of Starting Late
Contributing $500/month starting at 25 vs. starting at 35 (assuming 8% annual return):
- Starting at 25: $1,745,000 by age 65
- Starting at 35: $745,000 by age 65
- The 10-year head start is worth $1,000,000
The extra $60,000 you contributed in those 10 years (10 years × $6,000/year) generated an extra $1 million. That's the power of compound interest.
Traditional vs Roth 401(k)
If your employer offers both, the choice comes down to current vs. future tax rates:
- Traditional 401(k): Contributions reduce taxable income now. Pay taxes on withdrawal in retirement. Best if you expect to be in a lower tax bracket in retirement.
- Roth 401(k): Contributions are after-tax. Withdrawals in retirement are tax-free. Best if you're young or expect higher taxes later.
Most financial planners recommend Roth for people under 40 and traditional for higher earners over 50. When in doubt, split contributions between both.
See how your 401(k) grows with employer match
Use the 401(k) Calculator →