How much you should contribute to your 401(k) depends on your financial goals, employer match, and personal circumstances, but here are key guidelines and limits for 2025:

Contribution Limits for 2025

• The maximum employee contribution limit is $23,500.
• If you are age 50 or older, you can contribute an additional catch-up amount of $7,500, for a total of $31,000.
• For those aged 60 to 63, the catch-up contribution is increased to $11,250, allowing a total of $34,750.
• Employer contributions do not count toward your individual limit but combined employee and employer contributions cannot exceed $70,000 (or higher limits if you qualify for catch-up contributions)

How Much Should You Contribute?

• Many financial experts recommend contributing 10% to 15% of your income to your 401(k) during your working years to build adequate retirement savings.
• At a minimum, contribute enough to get the full employer match if your employer offers one, as this is essentially free money.
• You can start with a lower percentage and increase your contributions gradually, for example by 1% or 2% each year until you reach your target.
• Your ideal contribution rate should be based on your retirement goals, expected retirement age, desired lifestyle, and how much you expect from Social Security or other income sources

Summary

• Aim for 10-15% of your salary as a general rule.
• Always contribute at least enough to get your employer’s full match.
• Max out contributions if you can afford it, especially if you are behind on savings.
• Adjust contributions over time as your financial situation changes.

This approach balances saving enough for retirement while managing current financial needs effectively