US 401(k) Guide

2025 Contribution Limits

401(k) employee contribution limit 2025: $23,500. Catch-up contribution if age 50+: additional $7,500 (total $31,000). New for 2025: catch-up for ages 60-63 is $11,250 (instead of $7,500) under SECURE 2.0 Act. Employer match does NOT count toward the $23,500 limit — it's a separate $46,000 combined limit. Most people don't contribute the max — the median 401(k) contribution rate is 7-8% of salary. Best practice: contribute AT LEAST enough to get full employer match (free money), then increase 1%

Roth vs Traditional 401(k)

Traditional 401(k): contribute pre-tax, money grows tax-deferred, withdrawals in retirement taxed as ordinary income. Reduces current year taxable income. Best when current tax bracket is HIGH and you expect to be in a LOWER bracket in retirement. Roth 401(k): contribute post-tax, money grows tax-free, withdrawals in retirement are tax-free. Doesn't reduce current taxable income. Best when current tax bracket is LOW and you expect to be in a HIGHER bracket in retirement. Young workers often bene

Employer Match — The Most Important Rule

Always contribute enough to capture the full employer match. Common match structures: 50% of contributions up to 6% of salary (most common — equals 3% additional from employer). 100% of contributions up to 3% of salary. 100% on first 3% + 50% on next 2%. Calculating the real value: at $75,000 salary with 50% match on first 6%, you contribute $4,500/year, employer contributes $2,250/year. Over 35 years at 7% return, that $2,250/year of employer money grows to approximately $311,000. By contrast,

The 4% Rule and Retirement Withdrawals

The Trinity Study (1998, updated regularly) suggests that retirees can safely withdraw 4% of their starting portfolio in year one, adjusting for inflation each year, with 95%+ probability of the money lasting 30 years. Translation: every $1 million in retirement savings provides approximately $40,000/year sustainable income. A 25-year-old saving $500/month at 7% reaches $1.2M by 65 — providing $48,000/year retirement income, supplementing Social Security (~$24,000/year average) and any other ret

Not financial advice. This calculator is for general information and education only. Figures are estimates and may not reflect your circumstances. For decisions, consult the FCA register and a qualified financial adviser. See our editorial standards.

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