How Much Should I Contribute to My 401(k)?
Enter the retirement income you want and this solves for the contribution rate that reaches it — then prices that rate in take-home pay per paycheck.
How this is calculated
The target income is converted to the pot needed to produce it at your withdrawal rate (4% by default), then the contribution rate is found by bisection: the rate at which the projected balance meets that pot exactly. It solves, it doesn't guess. The result is rounded up, never down, because rounding down misses the target it was asked to hit.
Statutory caps, every year. Pay counted is capped at $360,000 under §401(a)(17). Your own deferral is capped at $24,500 under §402(g), rising to $32,500 from age 50 and $35,750 during the 60–63 window under §414(v). The combined total is held to the §415(c) ceiling of $72,000. Each projected year uses the ceiling for the age you are in that year, so the cap steps up at 50 and again inside the 60–63 window.
Growth. A half-year convention: contributions are assumed to arrive evenly through the year and earn half a year of the return you enter (7% by default), with annual compounding on the balance.
Take-home cost. Federal income tax on the standard deduction plus FICA, at your filing status. FICA is charged on full wages, because a 401(k) deferral doesn't reduce Social Security or Medicare tax. State tax isn't modelled.
Not modelled: tax on withdrawals, state income tax, sequence-of-returns risk, variable returns, career breaks, job changes, tiered or capped match formulas, vesting, plan fees, Medicare IRMAA surcharges, and any income other than the figure you enter.
15% is a number with nothing attached to it
15% is the most repeated figure in retirement writing. Save 15% of your salary, every article says, and the number isn't wrong so much as unattached to anything: it doesn't know your age, your balance, your match or what you want the account to pay you.
Someone who starts at 22 with an employer match and never stops will do well on 15%. Someone starting at 45 will fall badly short on it, and someone who inherited a balance at 30 is putting away more than they need to. Same number—three different outcomes.
So the position here is blunt. 15% is a fine outcome for the 22-year-old and a bad plan for the 45-year-old, and a page that gives both of them the same figure isn't telling either of them anything.
The rate you need is set by four things, and a rule of thumb knows none of them: how long the money has to grow, what you already hold, what your employer adds, and what you want the account to pay you. Change any one and the answer moves several percentage points.
Start from the income you want, because the rate falls out of it
The question "how much should I contribute" can't be answered directly. The answerable version is: what income do I want this account to produce, on top of Social Security, and what rate gets me there?
Working backwards has one further advantage. It surfaces the case where no rate under the §402(g) cap is enough, and that case is common for anyone starting at 45 or later. A calculator that only projects forward from a rate you type in will never tell you this. It shows you a number, the number is short, and you have to notice that yourself.
Three rates matter, and they're usually different numbers
Most people only need to know three.
- The match rate. Whatever captures every matched dollar, commonly 5% or 6%. This is the floor. It's the only contribution with a guaranteed, immediate return, and going below it is declining part of your pay.
- The target rate. What the calculator above solves for. This is the one that's actually about you.
- The ceiling rate. The percentage at which you hit $24,500, which at a salary of $360,000 or more is well under 10%. Above the ceiling further contributions have to go somewhere else.
What percentage of your pay should go in, and why the honest answer moves with your age
Enough to take the whole employer match, which is usually 5% or 6%, and then whatever rate reaches your own target on top of that. For someone starting in their twenties that total usually lands around 10–15% of pay including the match. For someone starting at 45 it's routinely double that, and sometimes no legal rate is enough.
Which is why by-age tables fail. They print a percentage against a decade as though the decade were the thing that set it, when what actually sets it is how many years of compounding you have left. At 7% a year money roughly doubles every decade. Start ten years later and each dollar gets one fewer doubling, so it takes something close to twice as many dollars to arrive at the same place. That's the whole relationship, and a table hides it behind a number.
Three rules survive the mess.
Never go below the match, because that's declining pay. Put the whole of every rise you get above inflation into the rate until you reach your solved number. And re-run the sum every few years, because the answer moves when the balance does, and it moves most for the people who have the least room left to react. New to the account? What a 401(k) is, and how much people typically put in one is the plainer version of this question. The per-paycheck dollar figure at your own salary is a different calculation again.
The paycheck falls by less than the contribution
A rate that reaches your own target and a rate that fills the statutory ceiling are two different questions. That one is pure arithmetic. Pick a percentage, read off the dollars, and it is the right page if you already know you want to hit $24,500.
Before you raise your rate, understand that a $500 deferral doesn't cost $500. A traditional contribution leaves your pay ahead of federal income tax, so the paycheck absorbs only part of it.
Take-home falls by about $390 at a 22% marginal rate and about $380 at 24%, and the higher your bracket the wider that gap gets. The paycheck calculator works it out for a specific change, and the calculator above prices the solved rate at your own salary and filing status, because the abstract percentage isn't what anyone is deciding. The decision is about the paycheck.
FICA isn't reduced. Social Security and Medicare come out of your full wages whatever you defer, which is why the saving is less than your full marginal rate. And the deferral only postpones the bill. A traditional 401(k) is taxed as ordinary income when you take it out, and nobody, this page included, can tell you what rate that will be in 2056. Whether paying the tax now instead is the better trade is the question the Roth vs traditional calculator exists to settle.
If the rate is out of reach, the calculator isn't the thing to change
The solved rate is often out of reach. Re-running the calculator with kinder assumptions until it says something comfortable isn't the useful response, since a return nudged above 7% to make the sum work is a wish, not a plan.
- Take the match first, always, even if everything else is impossible this year.
- Raise the rate at each pay rise. One percentage point taken from an increase is a contribution you never feel, because your take-home doesn't fall. Repeated over a decade this does most of the work.
- Check the retirement age. Two more years is often worth more than several points of contribution rate: it adds two years of contributions and two years of growth, and it removes two years of drawdown.
- Check the withdrawal rate. The 4% figure came out of one influential study and hardened into a convention. What it survives is its own question. Moving it changes the required pot enormously, which is precisely why you should be sceptical of any tool that hides it.
- Check what else is coming. A Social Security figure taken from your own statement will move this result more than most other inputs. Get it from ssa.gov.
A fixed 7% return is the assumption doing most of the work
Real markets don't deliver 7% a year. They deliver a sequence, and the order the good and bad years arrive in matters a great deal near retirement, when the balance is largest and a bad year costs the most. Two people with identical average returns can end up in very different places. Nobody knows what your sequence will be. This page doesn't pretend to.
What else the model ignores is listed in the method note above the fold, and the item on that list worth worrying about is the last one: nothing here knows what Congress does to the rules between now and 2056. Use the figure to decide whether to move from 6% to 11%. Don't use it as a promise.
Every formula is published in full, and the contribution limits page covers the §402(g) and §415(c) ceilings this applies.
Frequently asked questions
What percentage should I contribute to my 401(k)?
There's no single right number, because the answer depends on what you want the account to pay you and how long it has to get there. The usual advice of 10–15% of salary is a reasonable starting point for someone who begins in their twenties, and badly short for someone starting at 45. Use the calculator above. It works backwards from the income you want to the rate that reaches it, and tells you plainly when no legal rate is enough.
Is 6% enough for my 401(k)?
6% is usually the rate that captures a full employer match, which is why it appears so often. It's a floor, not a target. Whether it's enough depends on your age, your existing balance and the income you want. For someone starting at 25 with a generous match it can be close; for someone starting at 45 it rarely is.
Should I count my employer match toward my contribution rate?
For reaching a target, yes. The money lands in the same account and compounds the same way. This calculator includes it. For the IRS limits, no. The $24,500 deferral limit applies only to your own money, and the match counts instead toward the separate §415(c) ceiling of $72,000 that covers everything paid into the account.
How much does contributing more actually cost me per paycheck?
Less than the contribution, because a traditional 401(k) deferral comes out before federal income tax. At a 22% marginal rate, $500 into the plan reduces take-home by roughly $390. FICA isn't reduced. Social Security and Medicare are withheld on your full wages either way, and the calculator shows the real per-paycheck figure at your salary and filing status.
What if I cannot afford the rate the calculator gives me?
Then the target, the retirement date or the plan has to change, and knowing that now is worth more than a comfortable number. Take the employer match first, since that's the one contribution with a guaranteed return. Then raise the rate one point at a time, ideally at each pay rise so the increase never reduces the pay you're used to. And replace the Social Security placeholder with your own figure from ssa.gov before you conclude anything.
Does this account for tax in retirement?
No, and that matters. Every figure here is pre-tax. A traditional 401(k) is taxed as ordinary income when withdrawn, so compare the income shown against your gross salary today, since your take-home is the wrong yardstick. It also leaves out state tax, Medicare IRMAA surcharges and sequence-of-returns risk. Treat the result as the shape of the answer and nothing firmer.