Key takeaways

• Payroll deductions can make funding your 401(k) plan more convenient and harness the potential power of compounding
• Savers can set aside $24,500 toward their 401(k) for 2026, and those 50 and older can contribute an additional $8,000.
• Making large enough 401(k) deferrals to unlock any employer match can accelerate your overall contributions

401(k) contributions are deductions from your take-home pay, and workers have flexibility to adjust this amount. The tax advantages of workplace accounts can give retirement savings room for potential growth.

You give, and you get.

Your contribution rate is the percentage of your wages that is deducted from your paycheck and moved into your 401(k) or other retirement plan account.

In most cases, you choose the value you want to put in. While your take-home pay will be reduced, your retirement nest egg has the potential to grow.

Contributing 10% (or even more) to your retirement plan account can make a big difference toward growing your future savings.

When should I start contributing?

The earlier, the better.

If you’re eligible to participate in your employer-sponsored retirement plan, consider saving now. Even if you can’t afford to set your contribution rate to 10% right away, you can still boost your balance thanks to compound growth potential. With compounding, not only could your investments have the potential to grow, but any earnings could also add to your balance because earnings may be reinvested — tax-free — into your retirement account.

Above all, as you’re climbing the ladder toward 10% as you age, your savings balance could continue to rise with you.

FOR ILLUSTRATIVE PURPOSES ONLY. This is a hypothetical illustration to show the value of an increase in contributions; it is not intended as a projection or prediction of future investment results, nor is it intended as financial planning or investment advice. It assumes a 6% average annual rate of return, 12 pay periods, $50,000 starting salary with no increases invested over 30 years, a 25% federal income tax bracket, reinvestment of earnings and that the payee lives 20 years in retirement. Rates of return may vary. This illustration does not include any charges, expenses or fees that may be associated with your Program. The tax-deferred accumulations shown above would be reduced if these fees had been deducted.

How can I grow my 401(k) contribution?

Little by little, you can make huge strides.

If you want to stay on track for your future, consider increasing your 401(k) contribution by 1% every year until you reach the 10% target. To help remain on schedule (and so you don’t forget!), check with your 401(k) provider to see if it offers an automatic escalation feature — which can help you gradually gain ground each year.

Read more: Here’s what saving 1% more could mean for your retirement

Should I max out my 401(k)?

You don’t have to stop contributing at 10%.

If you max out your 401(k), also known as deferring up to the IRS limit, you can help potentially strengthen your nest egg at an even faster pace. The IRS sets contribution limits on an annual basis when it comes to how much you can save for retirement. In 2026, you can contribute up to $24,500 to your 401(k) plan, up from $23,500 in 2025.¹ If you’re aged 50 or older in 2026, you may be eligible to sock away an additional $8,000 in catch-up contributions. People aged 60 to 63 in 2026 can contribute an additional $11,250 to their 401(k) plans — on top of the regular maximum contribution of $24,500.²

Read more: Can I contribute to a 401(k) and an IRA?

What about 401(k) matching?

If your company offers matching, it’s often referred to as “free money.” That’s because when you contribute to your 401(k) plan, many employers will usually match 50% or 100% of your contributions up to a certain amount. For example, if your organization offered a 100% company match up to 5% and you set your contribution rate to 5% (or higher), you would essentially double your total contribution when the money your employer added is fully vested.

Employer contributions are a great way to boost your overall retirement savings, so a good rule of thumb is to aim to contribute enough to your 401(k) to get the full employer match.