Here’s How Much You Should Have Saving in Your 401(K) in 2025
Retirement planning will change in 2025 , which means now is the time to take a look at your retirement savings and make sure you’re on the right track. These updates, part of the SECURE Act 2.0 passed in 2022 , are aimed at expanding retirement savings options and making things easier for “maximum savers.”
One of the best ways to save for retirement is through a 401(k) plan, especially if your employer offers matching contributions. The IRS increased contribution limits for 401(k) plans in 2025 to $23,500, up from $23,000 in 2024. This gives you even more options for storing money in this tax-advantaged account. So, given these new numbers, how much should you aim to contribute this year?
Follow the 10% rule
Financial experts recommend saving 10-15% of your gross income for retirement. For example, if you make $60,000 per year, you would want to save $6,000 to $9,000 per year. Given the 2025 401(k) limit is $23,500, the 10% rule means you’d have to be pretty high-earning to start worrying about that contribution limit. For example, if you make $80,000 a year, 10% of your income is $8,000. This amount is well below the $23,500 contribution limit, allowing you to follow the 10% rule while maximizing the tax benefits of your 401(k).
Increase in catch-up contributions for pensioners
Another big change coming this year: Employees ages 60–63 will be able to make larger additional contributions to their 401(k) plans, with new limits set at either $10,000 per year or $150 % of the standard limit of additional contributions. – which amount is greater?
This expansion of catch-up contribution limits provides workers with a valuable opportunity to increase their retirement savings during their peak earning years. More than half of 401(k) participants with income above $150,000 and nearly 40% with an account balance greater than $250,000 made additional contributions in 2023, according to Vanguard’s 2024 How America is Saving Report .
Determine what you can afford
Look at your monthly salary and expenses. Figure out where you can cut costs and put more money toward retirement. Even small cuts, like getting lunch delivered to work or canceling unused subscriptions, can make a difference.
Ideally, try to contribute at least enough to get matching funds from your employer. This is free money you won’t want to miss out on. If your employer contributes up to 5% of income, then you must contribute at least this percentage.
Aim to increase your contribution by at least 1%.
Can’t take on 10% yet? This is normal and completely understandable. This number is generally accepted in the world of personal finance, but everyone’s financial situation is different. To get started, wherever you are right now, consider increasing your contribution rate by just 1% this year. This small change will help increase your savings over time without sacrificing too much of your lifestyle. And you can repeat this every year until you reach your savings target.
The main thing is to start saving as early as possible and be consistent. If you’re not sure what amount to aim for, meet with a financial advisor who can help you set up a savings plan.