How does your 401(k) compare to the national average?

In the early days of your retirement savings journey, one of the most effective things you can do is automate your payments. This simplifies the process and ensures you won’t forget or procrastinate putting money into your account. Since the funds are removed automatically, you’ll be accustomed to it and it won’t feel like you’re missing out on part of every paycheck.⁴ You can even set up auto-escalation as well, so your contributions automatically increase every year.⁵

Eager to see your retirement savings start growing even faster? An employer match is an option you shouldn’t turn down. While you might have other financial goals on the mind at this age – like putting money away for your child's college tuition – if your company will match up to 6% of your contribution, putting in that full 6% yourself is a wise decision. Otherwise you’re simply not taking advantage of the benefits for the company’s employer match.⁵

We know it’s tempting to earmark a big bonus for a special vacation or home renovation. But putting at least part of any raise or bonus towards your 401(k) can go a long way towards meeting your goals.⁶ Another great reason to dedicate income bumps to retirement? The average American reaches their peak earning potential between the ages of 44-55.⁷ Small actions taken now can have big impact down the line.

Once you hit age 50, the IRS allows you to make 401(k) contributions that are above the standard limit.⁸ In 2020, the annual contribution limit for a 401(k) is $19,500, but people over 50 can contribute an additional $6,500 –  so $25,000 total. These catch-up contributions can be a great way to help boost your savings as your near the final stretch before retiring.