Ten percent? Twenty percent? More?
I’ve written a lot about the benefits of both 401(k)s and IRAs. We’ve also looked at the emerging Roth 401(k) option and when it makes sense for young investors.
But everybody’s next question is: “Okay, okay, but how much should I put into my 401(k)?”
There’s no one-size-fits-all answer
One of the most popular posts in this blog’s ten-year archives is “How Much Should Be In Your 401(k) At 30?”
I was 25 when I wrote it, trying to decide how much to contribute to my own 401(k).
But what I learned from over 200 (sometimes nasty) comments is that setting a savings benchmark by age alone is silly; no two savers are the same. You can’t compare the engineer who graduated at 22 into a $65,000-a-year job with no student loan debt to a doctor who starts practicing at 29 and has $200,000 in loans. Or the social worker earning $35,000 a year and needing all of it just to eat.
You can use this basic 401(k) calculator to estimate how much you will save on your 401(k) based on your personal status:
Today I want to provide slightly more tactical advice. As a percentage of your income, how much should you contribute to your 401(k)?
- If you’re in debt?
- If you can also do a Roth IRA?
- If your employer do