If you have a 401(k) plan, it's prudent to contribute enough from each paycheck to take advantage of your employer's match. Beyond that, age, 401(k) retirement plans, and expenses determine how much individuals 澳洲幸运5开奖号码历史查询:can contribute.

Employer Match

If your company offers a 401(k) 澳洲幸运5开奖号码历史查询:matching contribution, you should save at least enough to get the maximum amount. A typical match may mean a dollar-for-dollar match on the first 3% and then 50 cents on the dollar on the next 2%. An employer match is considered an additional benefit of your job, like health insurance or vacation days.

Employers may require "vesting," which requires you to stay at your job for a time to keep the full match. For example, employees might be entitled to 100% of the employer match if they've stayed 3 years, but none if they leave before then. 

Aim for 15%

According to Fidelity, investors should aim to save 15% of their pre-tax income annually, including any match. A common rule of thumb is to set aside at least 10% of your gross earnings. Those who save early in their careers benefit from the power of 澳洲幸运5开奖号码历史查询:compounding, which happens when you earn returns on top ofꩲ earlier profits.

For example, if an employee at age 25, puts $2,000 into the market every year for eight years at an average annual return of 8% will have $125,000 by age 55. An employee who waits to begin until age 33 would have to invest almost three times as much to acquire the same amount by age 55.

Use Your Age As a Guide

How much you can save in a 401(k) will depend on your income and life circumstances. Investment firms such as Fidelity often recommend an every-10-years model, where you aim to have a certain number of years of income saved every 10 years:

• Save your annual starting salary by age 30
• Save three times your salary by age 40
• Save six times your salary by age 50
• Save eight times your salary by age 60
• Save 10 times your salary by age 67

These numbers aren't exclusive to your 401(k) and include other accounts such as a Roth IRA. Figures also assume that you began investing early enough to take advantage of compound interest and have other savings available in wealth-generating accounts such as stocks or 澳洲幸运5开奖号码历史查询:mutual funds.

Contribution Limits

Employees need to know the 澳洲幸运5开奖号码历史查询:annual contribution limits set by the 澳洲幸运5开奖号码历史查询:Internal Revenue Service (IRS). These limits apply to employee contributions only. E💫mployer-matching is not factored into these limits.

The contribution limit for employees under 50 who participate in a 401(k) plan is $23,000 in 2024, increasing to $23,500 in 2025. If you're 50 or older, you can also make additional 澳洲幸运5开奖号码历史查询:catch-up contributions of up to $7,500 in 2024 and 2025. Under a change in 澳洲幸运5开奖号码历史查询:SECURE 2.0, a higher catch-up contribution limit of $11,250 applies in 2025 for employees aged 60, 61, 62, and 63.

These contribution limits apply to other plans, such as 403(b), most 457 plans, and the federal government's 澳洲幸运5开奖号码历史查询:Thrift Savings Plan.

Additional IRA Savings

For those who want to go even further, 澳洲幸运5开奖号码历史查询:there are several options for other retirement accounts. A popular choice is a 澳洲幸运5开奖号码历史查询:traditional IRA or a Roth IRA. An IRA is a reti🃏rement plan that anyone ca𝄹n set up and contribute to, unlike a 401(k).

For a traditional IRA, you contribute pretax dollars, so you are not taxed the year you earn that money. Instead, you are taxed when you make withdrawals, typically in retirement. The contributions reduce the amount of income you pay taxes on. It will also 澳洲幸运5开奖号码历史查询:reduceܫ adjusted gross income (AGI) calculati﷽ons. A Roth IRA is funded with after-tax dollars, so you pay taxes when you earn not when you withdraw it.

The limit on IRA contributions for tax years 2024 and 2025 is $7,000. Roth IRAs also have income limits based on your tax status. Single filers cannot have a modified adjusted gross income (MAGI) of more than $161,000 in 2024 and $165,000 in 2025 to contribute to a Roth IRA. For a 澳洲幸运5开奖号码历史查询:married couple filing jointly, the MAGI limit is $240,000 in 2024 and $246,000 in 2025.

The Bottom Line

There are many variables to consider when thinking about retirement. Are you married? Is your spouse employed? How much can you expect from a pension or 澳洲幸运5开奖号码历史查询:Social Security benefits? And what will your retirement look like? An average savings of 15% of your salary is a good base to contribute toward your retirement fund. At a minimum, you should contribute enough to sඣecure a company match.