{"id":614448,"date":"2026-09-28T16:14:15","date_gmt":"2026-09-28T16:14:15","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/614448\/"},"modified":"2026-09-28T16:14:15","modified_gmt":"2026-09-28T16:14:15","slug":"401k-savers-are-breaking-records-heres-how-to-join-them-if-youre-behind","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/614448\/","title":{"rendered":"401(k) savers are breaking records. Here\u2019s how to join them if you\u2019re behind"},"content":{"rendered":"

\"Independent<\/p>\n

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Retirement savers are on fire \u2014 401(k)<\/a> contributions held steady at record levels from April to June, a new study found. <\/p>\n

The average person saved 14.4 percent of their income into 401(k)<\/a> accounts \u2014 9.6 percent from employees and 4.8 percent from employers, according to financial firm Fidelity\u2019s latest quarterly retirement analysis<\/a>.<\/p>\n

\u201cDespite market fluctuations earlier this year, retirement savers continued to focus on their long-term goals,\u201d Fidelity wrote. <\/p>\n

Balances grew from $141,000 at the end of March to $155,800, the highest quarterly increase since 2020, the firm noted.<\/p>\n

Yet not every 401(k)<\/a> account holder is contributing<\/a> 14.4 percent, as even 10 percent may seem out of reach for those struggling through the country\u2019s affordability crisis<\/a>.<\/p>\n

\"ContributingContributing to a 401(k) isn\u2019t a race, but sound savings habits used early in a career can increase the chances of good long-term results (Getty)<\/p>\n

Hiring a financial planner can help you get a good read on whether you\u2019re matching the benchmarks followed for people at your age with your income, Nick Avila, founder of United Debt Relief, told The Independent. <\/p>\n

Still, if you have you fallen behind on your 401(k), experts say it’s not as hard as you think to catch up. <\/p>\n

Raise that leverage<\/p>\n

One approach to catching up with the average 401(k) contribution rate is to boost your contributions by 1 percent every time you earn a raise.<\/p>\n

So, if you earn a raise this year and your contribution rate is 3 percent, you\u2019d log into your retirement account dashboard and raise your rate to 4 percent. <\/p>\n

The younger you are, the bigger impact a 1 percent raise can have at retirement, Fidelity pointed out in an August article<\/a>. <\/p>\n

\u201cFor a 35-year-old making $60,000, [adding 1 percent] means investing less than $12 more per week \u2014 but could translate to nearly $110,000 by 67,\u201d Fidelity wrote. <\/p>\n

Matchmaking<\/p>\n

Arguably the greatest strength of a 401(k) is that most employers match employee contributions up to a certain point. <\/p>\n

The most common matching scheme is 50 percent up to 6 percent<\/a>, according to 401(k) provider Human Interest. That means the employer matches half an employee\u2019s contribution up to 6 percent of their paycheck. <\/p>\n

An employer match is commonly called \u201cfree money,\u201d and rightly so, because all an employee has to do to get it is make contributions to their retirement account. <\/p>\n

This free employer money comes with one catch \u2014 vesting. In some cases, your employer\u2019s contribution to your 401(k) isn\u2019t yours until you\u2019ve worked there a certain amount of time \u2014 say, three years. <\/p>\n

Debt first, then do the bump-up<\/p>\n

Another strategy to playing 401(k) catch-up is contributing up to your employer\u2019s match \u2014 6 percent, for example \u2014 then paying down high-interest debt before bumping up contributions even higher, Avila said. <\/p>\n

\u201cLook at what you owe,\u201d he said. \u201cIf you’re carrying credit card balances, that’s usually the first thing holding the savings rate down.\u201d<\/p>\n

The average yearly interest payment on a $5,000 credit card is around $1,100, Avila said \u2013 that\u2019s money that could be going into your 401(k). <\/p>\n

\u201cClearing that balance frees the money permanently, and it can go straight into a contribution increase,\u201d he said. <\/p>\n

Fire it up when you hit 50<\/p>\n

The Internal Revenue Service (IRS) limits how much you can contribute to a 401(k) in a year \u2013 for 2026, it\u2019s $24,500<\/a>. <\/p>\n

Knowing that some people fall behind on their savings, the IRS raises the limit by $8,000 in 2026 so those aged 50-59 can catch up. That catch-up amount increases to $11,250 for those aged 60-63. <\/p>\n

If you max out your catch-up contributions from 50 to 63, you can add more than $100,000 to your 401(k) balance. <\/p>\n

Typically, the IRS increases all three limits each year to keep pace with inflation, so future contribution limits should be higher than they are in 2026.<\/p>\n","protected":false},"excerpt":{"rendered":"Want to bookmark your favourite articles and stories to read or reference later? Start your Independent Membership today.…\n","protected":false},"author":2,"featured_media":614449,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[138,246,111,139,69,244,245],"class_list":["post-614448","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-business","tag-finance","tag-new-zealand","tag-newzealand","tag-nz","tag-personal-finance","tag-personalfinance"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/614448","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=614448"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/614448\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/614449"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=614448"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=614448"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=614448"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}