Retirement savers are on fire — 401(k) contributions held steady at record levels from April to June, a new study found.
The average person saved 14.4 percent of their income into 401(k) accounts — 9.6 percent from employees and 4.8 percent from employers, according to financial firm Fidelity’s latest quarterly retirement analysis.
“Despite market fluctuations earlier this year, retirement savers continued to focus on their long-term goals,” Fidelity wrote.
Balances grew from $141,000 at the end of March to $155,800, the highest quarterly increase since 2020, the firm noted.
Yet not every 401(k) account holder is contributing 14.4 percent, as even 10 percent may seem out of reach for those struggling through the country’s affordability crisis.
Hiring a financial planner can help you get a good read on whether you’re matching the benchmarks followed for people at your age with your income, Nick Avila, founder of United Debt Relief, told The Independent.
Still, if you have you fallen behind on your 401(k), experts say it's not as hard as you think to catch up.
Raise that leverage
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.
So, if you earn a raise this year and your contribution rate is 3 percent, you’d log into your retirement account dashboard and raise your rate to 4 percent.
The younger you are, the bigger impact a 1 percent raise can have at retirement, Fidelity pointed out in an August article.
“For a 35-year-old making $60,000, [adding 1 percent] means investing less than $12 more per week — but could translate to nearly $110,000 by 67,” Fidelity wrote.
Matchmaking
Arguably the greatest strength of a 401(k) is that most employers match employee contributions up to a certain point.
The most common matching scheme is 50 percent up to 6 percent, according to 401(k) provider Human Interest. That means the employer matches half an employee’s contribution up to 6 percent of their paycheck.
An employer match is commonly called “free money,” and rightly so, because all an employee has to do to get it is make contributions to their retirement account.
This free employer money comes with one catch — vesting. In some cases, your employer’s contribution to your 401(k) isn’t yours until you’ve worked there a certain amount of time — say, three years.
Debt first, then do the bump-up
Another strategy to playing 401(k) catch-up is contributing up to your employer’s match — 6 percent, for example — then paying down high-interest debt before bumping up contributions even higher, Avila said.
“Look at what you owe,” he said. “If you're carrying credit card balances, that's usually the first thing holding the savings rate down.”
The average yearly interest payment on a $5,000 credit card is around $1,100, Avila said – that’s money that could be going into your 401(k).
“Clearing that balance frees the money permanently, and it can go straight into a contribution increase,” he said.
Fire it up when you hit 50
The Internal Revenue Service (IRS) limits how much you can contribute to a 401(k) in a year – for 2026, it’s $24,500.
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.
If you max out your catch-up contributions from 50 to 63, you can add more than $100,000 to your 401(k) balance.
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.
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