Key Takeaways
\nMaxing out your 401(k) typically requires a high savings rate, but building up gradually can help you get there.Strategic moments like raises or job changes offer opportunities to boost contributions without hurting your budget.Hitting income milestones\u2014like $150,000\u2014can make maxing out your retirement savings far more realistic.<\/p>\n
Only about 14% of Americans contribute the maximum to their 401(k)<\/a> each year, according to Vanguard\u2019s How America Saves report.\n<\/p>\n That number might sound discouraging, but it doesn\u2019t mean the rest of us can\u2019t get there. In fact, most people who do eventually hit the limit\u2014$23,500 for people under 50 in 2025\u2014don\u2019t do so all at once. Instead, they work their way up through small, consistent increases timed with raises, career growth, and shifting financial priorities.\n<\/p>\n With the median<\/a> salary in the United States at about $62,000, Michael Hunsberger, a financial planner and founder of Next Mission Financial Planning, notes that even if you\u2019re making $100,000, you\u2019d need to contribute 23.5% of your income to max out your 401(k). \u201cIt can be done, but it\u2019s definitely not easy,\u201d he said. Still, the payoff can be huge: more savings, bigger tax advantages, and a lifestyle that prepares you for a less expensive retirement<\/a>.<\/p>\n Why Only 14% Contribute the Max to Their 401(k) <\/p>\n The short answer? Most people simply don\u2019t make enough.\n<\/p>\n \u201cLet\u2019s say someone makes $80,000,\u201d said advisor Dwayne Reinike, founder of Valiant Financial Planning. \u201cTo max out their 401(k)<\/a>, they would have to contribute over 28% of their income.\u201d\n<\/p>\n That\u2019s a tall order, especially when you’re also juggling housing costs, student loans<\/a>, and family expenses. And even high earners can be limited: Some want to max out but are considered highly compensated employees<\/a> and are limited due to IRS requirements, according to Reinike.\n<\/p>\n Instead of focusing on hitting the maximum right away, advisors often recommend starting with a smaller savings rate and building up slowly.\n<\/p>\n \u201cIt can be more useful to look at the percentage of income you\u2019re contributing and try to increase that regularly,\u201d Hunsberger said.\n<\/p>\n Important<\/p>\n For 2025, $23,500 is the 401(k) contribution limit for people under age 50. In 2026, it’s $24,500. Those age 50 and older can make catch-up contributions<\/a> which increases their limit. And people age 60, 61, 62, and 63 can contribute even more. The contribution limits typically increase every calendar year.<\/p>\n How to Time Your Increases With Raises and Life Changes <\/p>\n One of the best strategies is to increase your contributions when you get a raise or a new job.\n<\/p>\n \u201cEven if you get a small cost-of-living increase, you should consider increasing the percentage you withhold,\u201d Hunsberger said. \u201cYou\u2019re not used to living on the raise, so you\u2019re not going to miss it.\u201d\n<\/p>\n Reinike agrees. \u201cIf someone gets a raise, that\u2019s a great time to put some of that new income toward retirement<\/a>.\u201d Starting a new job? “That\u2019s another golden opportunity,” he said. Begin maxing out “right away,\u201d before your lifestyle adjusts to the higher pay, he suggests.\n<\/p>\n Automation can also help you stay on track.\n<\/p>\n