Your employer-sponsored 401(k) is a simple, automated, and tax-advantaged way to save for retirement. There is no question you should use a 401(k) if your employer provides one. What you may need help deciding, though, is how much you should contribute to enable a comfortable retirement.

Learn more: What is a 401(k)? A guide to the rules and how it works.

How much should I have in my 401(k)?

Your per-paycheck 401(k) deposit is typically defined in terms of a contribution rate. This is the amount of the deposit expressed as a percentage of your gross pay. Gross pay is the amount you earn before taxes and deductions.

The 401(k) contribution rate that is appropriate for you depends on various factors, including how old you are when you start contributing, whether your employer provides matching contributions, and how well your current salary covers expenses.

Factor 1. Your age when you start saving

Your potential to build wealth in your 401(k) is directly linked to your timeline. The longer your timeline, the more time there is for your invested funds to grow.

"A person who can start saving in their 20’s could conceivably have a seven-figure net worth in their 40’s or 50’s. A person who waits to start doing this in their 40’s or 50’s will never be able to catch up to the level that someone who starts in their 20’s can achieve."

— Chris Orestis, president at The Retirement Genius

Say you begin saving to your 401(k) in your 20s. In that case, a 6% contribution rate is a great starting point, according to Lisa A. Hojnacki, participant services coordinator and team lead at wealth manager Greenleaf Trust. Hojnacki also recommends increasing that rate by 1% annually until you reach the maximum allowed contribution.

If you get a later start on retirement saving, say, in your 40s or 50s, Hojnacki recommends contributing at least 15%, up to the maximum allowed contribution when possible.

The maximum allowed 401(k) contribution is set by the IRS annually. In 2025, the limit is $23,500 or $31,000 if you are over 50.

Learn more: How much can you contribute to your 401(k) in 2025?

Factor 2. Your access to employer-matching contributions

Many employers offer matching contributions, which are free 401(k) deposits paid for by your employer. They require you to contribute some amount, which the employer will “match” up to 100%.

As a common practice example, according to Fidelity, the employer might match 100% of your contributions up to 3%, plus 50% of your contributions on the next 2%.

Under these rules, you would contribute at least 5% of your salary to get the full employer match. If you make $60,000 annually, the math looks like this:

1. Your 5% contribution will be $3,000 annually.

2. Your employer match on the first 3% of your contribution is $1,800, or 3% of $60,000.

3. The remaining employer match is $600, which is 2%, or $1,200, divided by two.

In other words, if you contribute $3,000 annually, you get $2,400 in free contributions, paid for by your employer.

Factor 3. Your salary relative to expenses

401(k) contributions lower your net pay, so they must be budgeted. This can be challenging if your income barely covers your expenses.

In this scenario, experts recommend contributing any dollar amount you can afford.

"Starting with anything is better than nothing," said Hallie Kraus, CFP, CRPC, and financial planner with The Humphries Group.

If saving 15% of your income feels impossible, start with whatever you can manage — say, $25 or $50 monthly. Even small amounts, if invested, can compound and grow over time. The wealth momentum you generate can be a motivator to raise your contributions as your income increases.

Tips for raising your contribution rate

Your budget may require you to start with a lower contribution rate and work up to 15% or 20% over time. The following strategies can help you implement those contribution increases.

1. Use auto-escalation. Some 401(k) plans have an auto-escalation feature that increases your contribution rate automatically. You set the terms, which include the amount of the increase and the cadence. It makes sense to plan the increase to happen around the time you expect an annual raise.

2. Hold lifestyle spending steady. You can use pay increases to raise your 401(k) contributions instead of expanding your lifestyle, according to Saïd Israilov, CFP, financial planner and wealth manager at Israilov Financial. Resisting the urge to upgrade your home or car after a big raise can help you secure a more comfortable retirement.

3. Trim spending. Vanessa Welch, vice president for financial insights at wealth manager Empower, recommends reviewing your spending to find places to cut back. "By reducing unnecessary expenses, you'll have more to invest and will make real progress over time," Welch said.

Remember, too, that your 401(k) contributions are deducted from your pay before income taxes are calculated. As a result, the reduction in your take-home pay after raising your contribution will be less than the increase.

401(k) balance by age

You may also be interested in setting milestones for your 401(k) balance so you know your savings are on track. The process of setting milestones is an inexact science, however. One approach is to set a saving goal to reach by retirement and then work backward to identify milestones for ages 30, 40, 50, and so on. But knowing how much wealth you need to retire is hard to predict.

Learn more: How much should you have saved for retirement by 30, 40, or 50?

Pam Krueger, founder and CEO of wealth manager Wealthramp, recommends targeting a retirement balance equal to six to 10 times your gross salary. If that is the end goal, your 401(k) milestones might be:

1. 401(k) target balance in your 20s. One to two times your gross salary. If you make $60,000, for example, the target would be $60,000 to $120,000.

2. 401(k) target balance in your 40s. Three times your gross salary, or $180,000 if you earn $60,000 annually.

3. 401(k) target balance in your 50s. Six times your gross salary, or $360,000 on a $60,000 salary.

4. 401(k) target balance at retirement. Ten times your gross salary, or $600,000 on $60,000 in annual earnings.

This advice comes with two caveats. One, the target balances will increase if you expand your lifestyle as your salary grows. Expanding your lifestyle in your working years ultimately increases the cost of your retirement.

Two, these are guidelines only. There are many factors to consider when defining your target retirement balance.

As Thomas Buckingham, chief growth officer at Nassau Financial Group, explains, "There is no one dollar amount of assets or ratio to salary that will work for everyone."

A few factors to consider are your Social Security and pension benefits, living expenses, your discretionary spending habits, and whether you own a home.

Save early and often to your 401(k)

When defining your 401(k) contribution rate, look to save as much as you can afford. Ideally, you save enough to capture your full employer-matching contributions and commit to increasing your contribution rate annually. As you get closer to retirement age, you can adjust your plan to suit your future lifestyle needs.