How much should I contribute to my 401(k)?

Start by contributing enough to get your full employer match, then aim for 10-15% of your income including the match. If you can afford more, consider the annual limit of $24,500 ($32,500 if 50+).

Should I choose traditional or Roth 401(k)?

Traditional 401(k) reduces current taxes but you pay taxes in retirement. Roth 401(k) uses after-tax dollars but withdrawals are tax-free. Choose Roth if you expect to be in a higher tax bracket in retirement.

When can I withdraw money from my 401(k)?

Generally at age 59½ without penalty. Early withdrawals face a 10% penalty plus income taxes, though some exceptions exist for hardships. Required distributions start at age 73.

What happens to my 401(k) when I change jobs?

You can leave it with your old employer, roll it to your new employer's plan, or roll it to an IRA. Rolling to an IRA often provides more investment options and lower fees.

How do investment fees affect my 401(k)?

Fees compound over time and can significantly impact returns. A 1% difference in fees can cost tens of thousands over decades. Look for funds with expense ratios under 0.5%, preferably under 0.2%.

401(k) Optimization Guide

Maximize your retirement savings with smart 401(k) strategies: optimize contributions, capture the employer match, and build long-term wealth.

2026 401(k) Key Numbers

$24,500
2026 contribution limit: Under age 50; $32,500
Age 50+ limit: With catch-up; 15%
Recommended rate: Including match; 100%
Match ROI: Instant return

401(k) Projection Calculator

Assumes a 7% annual return. Move the sliders to see how the match and your rate change the outcome.

Your details

Current age30

2262

Retirement age65

5570

Annual salary$75,000

$40K$200K

Current balance$25,000

$0$500K

Your contribution6%

0%20%

Employer match3%

0%8%

Frequently asked questions

How much should I contribute to my 401(k)?: Start by contributing enough to get your full employer match, then aim for 10-15% of your income including the match. If you can afford more, consider the annual limit of $24,500 ($32,500 if 50+).
Should I choose traditional or Roth 401(k)?: Traditional 401(k) reduces current taxes but you pay taxes in retirement. Roth 401(k) uses after-tax dollars but withdrawals are tax-free. Choose Roth if you expect to be in a higher tax bracket in retirement.
When can I withdraw money from my 401(k)?: Generally at age 59½ without penalty. Early withdrawals face a 10% penalty plus income taxes, though some exceptions exist for hardships. Required distributions start at age 73.
What happens to my 401(k) when I change jobs?: You can leave it with your old employer, roll it to your new employer's plan, or roll it to an IRA. Rolling to an IRA often provides more investment options and lower fees.
How do investment fees affect my 401(k)?: Fees compound over time and can significantly impact returns. A 1% difference in fees can cost tens of thousands over decades. Look for funds with expense ratios under 0.5%, preferably under 0.2%.

Warren provides educational information, not individualized financial, tax or legal advice. Read our disclaimers.

Related glossary terms

By the numbers

What the data says

Year-end 2024
$38,176
Median 401(k) balance among Vanguard plan participants
The average is $148,153, skewed by large accounts
Source: Vanguard, How America Saves 2025
2026 tax year
$24,500
Employee 401(k) contribution limit for 2026
Catch-up is $8,000 at 50 and over, $11,250 at ages 60 to 63
Source: IRS, Notice 2025-67
1928 to 2024
~10% a year
Long-run average annual return of the S&P 500 including dividends
Before inflation, 1928 to 2024, with wide swings year to year
Source: NYU Stern, Aswath Damodaran historical returns dataset

National figures from the sources shown, as of the period on each card. They are context, not a forecast or advice for your situation.

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