How Much Should You Contribute to Your 401(k)?

Start with the employer match

If your employer matches contributions — say, 50% of the first 6% you put in — that match is an instant, guaranteed return. Contributing less than the amount needed to get the full match leaves part of your compensation on the table.

2026 contribution limits

The $24,500 limit is the cap on your own pre-tax and Roth deferrals combined, across all 401(k)/403(b) plans you participate in. Employer match does not count against it — but the total from all sources can't exceed $72,000.

How 401(k) contributions affect your paycheck

Traditional (pre-tax) 401(k) contributions come out before income tax is calculated, so they lower both your retirement savings shortfall and your current tax bill. The cost to your take-home pay is therefore less than the dollar you contribute.

• Traditional 401(k): contributions are pre-tax now; withdrawals are taxed in retirement.
• Roth 401(k): contributions are after-tax now (no paycheck tax break), but qualified withdrawals are tax-free later.

A simple framework

1. Contribute at least enough to get the full employer match.
2. Build a starter emergency fund alongside it so you don't have to tap retirement savings.
3. Work toward 15% of gross income (match included) as you can afford it.
4. If you max the match and still have room, consider an HSA or IRA before pushing past 15%.