The short answer
At a minimum, contribute enough to get your employer’s full match, since that’s part of your pay. A common target is 15% of your income each year, counting the employer’s share, if you start in your mid-20s. The 2026 limit for your own 401(k) contributions is $24,500, plus $8,000 more if you’re 50 or older, or $11,250 more if you’re 60 to 63. How much you need depends on when you start, what you already have and when you want to retire.
The 2026 limits
| Contribution type | 2026 limit |
|---|---|
| Your own contributions (pre-tax or Roth) | $24,500 |
| Extra catch-up contribution, age 50 or older | $8,000 |
| Higher catch-up instead, ages 60 to 63 | $11,250 |
| IRA contributions | $7,500 |
| IRA catch-up, age 50 or older | $1,100 |
One change for 2026: if you earned more than $150,000 in Social Security wages from your employer in 2025, your catch-up contributions have to go in as Roth contributions, made after tax. If your plan doesn’t offer a Roth option, you can’t make catch-up contributions at all.
How much is enough?
Get the full match first. Many employers match part of what you put in, for example 50 cents for every dollar up to 6% of your pay. If you contribute less than the amount needed to get the whole match, you’re leaving part of your pay on the table.
Aim for about 15% in total. Fidelity’s guideline is to save at least 15% of your pre-tax income each year, including your employer’s contributions, for someone who starts at 25 and retires at 67. Its milestones are savings of about 1 times your salary by 30, 3 times by 40, 6 times by 50, 8 times by 60 and 10 times by 67.
Adjust for your starting point. Starting later, or planning to retire earlier, means saving more. Having a pension, or a spouse with large savings, may mean you need less.
For comparison, Vanguard’s How America Saves 2026 report found the average employee contributed 7.6% of pay in 2025, and employees and employers together put in 12.1%, a record high but still short of 15%.
What order to do things in
A common sequence for each extra dollar:
- Build a small emergency fund so a surprise bill doesn’t go on a credit card.
- Contribute enough to your 401(k) to get the full employer match.
- Pay off high-interest debt, such as credit card balances.
- Add to a Roth or traditional IRA, or increase your 401(k) contributions.
- Work up toward 15% of your income, and toward the annual limits if you can.
Traditional or Roth?
Traditional contributions lower your taxable income now, and you pay tax when you withdraw. Roth contributions are taxed now, and qualified withdrawals in retirement are tax-free. If you expect to be in a higher tax bracket later, or you’re early in your career, Roth often makes sense. If your tax bracket is high now, traditional contributions can save more. Many people split between the two.
How to invest what you put in
Most plans offer a target-date fund, which holds a mix of stock and bond funds and gradually shifts toward bonds as your retirement date nears. According to Vanguard, 69% of participants were in a professionally managed option such as a target-date fund in 2025. If you pick funds yourself, a common starting point is a mostly-stock mix when you’re young, becoming more conservative with age, with low fees throughout.
Where does gold fit?
Most 401(k) plans don’t let you buy physical gold, and some don’t offer a gold fund either. If you want gold in retirement savings, the usual routes are a gold fund in your plan, if it has one, a gold ETF in an IRA, or a separate gold IRA holding physical metal. Our guide to buying gold with a 401(k) explains the options, and is gold a safe investment? covers why it’s best kept to a modest share.
Frequently asked questions
Is it better to max out my 401(k) or my IRA first?
Start with the 401(k) up to the full employer match. After that, many people fund an IRA for its wider choice of investments, then return to the 401(k). If your plan has low-cost funds, putting more in the 401(k) can work just as well.
Can I contribute to both a 401(k) and an IRA?
Yes. The limits are separate. If you or your spouse have a workplace plan, your income may limit the deduction for traditional IRA contributions, and Roth IRA contributions phase out at higher incomes.
What if I can’t afford 15%?
Start where you can, even if it’s just enough for the match, and raise it by a percentage point each year or whenever you get a raise. Many plans can do this automatically.
Should I stop contributing when the market falls?
Generally not. Regular contributions buy more shares when prices are low, which helps over the long run.
Sources
- IRS, 401(k) limit increases to $24,500 for 2026, IRA limit increases to $7,500 (November 13, 2025)
- Mercer Advisors, Catch-up contributions 2026: SECURE 2.0 updates
- Fidelity, How much money should I save each year for retirement?
- PLANSPONSOR, Vanguard: participation, default rates reach record highs (June 16, 2026)
- Vanguard, How America Saves 2026