Financial advisors generally recommend contributing around 10% of your paycheck to your 401(k), but Americans in all age groups are falling short of that goal.
The good news is that three-quarters of Americans with access to a company retirement plan are contributing something to it; the bad news is most aren’t putting in enough to set themselves up for a comfortable retirement, according to the recently released How America Saves 2019 report from Vanguard.
The saving rates in the chart below reflect employees’ contributions only — they don’t include any matching contributions that their company might offer. A typical worker should aim for a total 401(k) contribution rate of 12% to 15% of pay, including both employee and employer deposits, according to Vanguard’s estimates. Most people aren’t there yet: when you factor in the company match, the average participant contribution rate over the past 15 years was 10.6% in 2018, Vanguard says.
There’s still time to sock away more savings, whatever your age or stage in your career. For 2019, you can contribute up to $19,000 a year to your 401(k), and those age 50 and over can put in an additional $6,000 in “catch-up” contributions.