How much should I contribute to get the full 401(k) match?

Enough to reach the cap in your plan's formula. For a match of 50% up to 6% of salary, that means contributing 6%, not 3%. Contributing 3% gets you only half the match.

Is it worth maxing out a 401(k)?

It depends on what the money would otherwise do. For a 35-year-old earning $90,000 with a 7% return, going from 6% to the $24,500 limit raises the balance at 65 from about $1.07 million to about $2.87 million, at a cost of about $1,210 a month in take-home pay. An emergency fund and paying off high-interest debt usually come first.

What if my employer doesn't offer a 401(k) match?

Then the 401(k)'s advantage is the tax treatment alone. An IRA offers a similar tax benefit, often with more investment choice and lower fees, so it is often the better first stop.

Retirement

The 401(k) match is a floor, not a finish line

Ben is 35, makes $90,000, and set his 401(k) to 6% on his first day because HR said “that gets you the full match.” He hasn’t touched it since, and he’d need to reset his password to see what it’s invested in. “Always get the full match” is some of the best advice in personal finance. The trouble is that it often gets heard as “the match is enough.” Run Ben’s numbers and the match turns out to be the first of two steps, and the second one is just as big.

Why the match comes first

A 50% match means your employer adds 50 cents for every dollar you contribute, up to a cap. That’s a 50% return on the day the money goes in, before the market does anything. Almost nothing else you can invest in comes close. Contributing less than it takes to get the whole match means turning down part of your pay.

A worked example

Here’s Ben: 35, earning $90,000 with $40,000 already saved, contributing 6% of salary to an employer plan that matches 50% of contributions up to 6%. Assume a 7% return until 65, a 24% tax bracket and the 2026 contribution limit of $24,500. The 401(k) Optimizer returns:

Each year: you put in $5,400, your employer adds $2,700, $8,100 in total
Balance at 65 at this rate: $1.07M
Balance at 65 contributing the maximum: $2.87M
Difference: $1.80M
Cost of going to the maximum: $19,100 a year more in contributions, which is $1,210 a month less take-home pay after the tax saving

For Ben, with the same assumptions, the balance at 65 moves like this with the contribution rate. At 0% it’s $304,490, which is just the $40,000 growing. At 3% it’s $687,056, at 6% $1,069,623, at 10% $1,409,681 and at 15% $1,834,755. Going from nothing to the full match adds about $765,000. Going from the match to 15% adds about $765,000 more. Both steps put another $8,100 a year into the account, so they’re worth the same at 65. The difference is who pays. A third of the first step is your employer’s money, and all of the second is yours.

Run your own numbers →Free 401(k) Optimizer, no sign-up. Put in your salary and match formula and see what each contribution level costs and grows to.

Reading the match formula

“50% up to 6%” means you have to put in 6% to get 3%. People often contribute the match percentage instead of the percentage that earns it. At 3% in this example, your employer adds $1,350 a year instead of $2,700, and the account ends $382,567 smaller at 65.

Two more things worth checking in your plan documents. First, whether the plan does a year-end “true-up.” If it doesn’t and the match is calculated per paycheck, reaching the annual limit early in the year can stop the match for the rest of it. Second, the vesting schedule, which decides how much of the match you keep if you leave before a set number of years.

Where the next dollar should go

Past the match, putting more into a 401(k) is an ordinary trade between money now and money later, and other things usually come first. TheSharpDollar’s next-dollar guide uses this order: a small starter emergency fund, the full match, high-interest debt, a full emergency fund, a Roth IRA or HSA, then more 401(k). A painless way to climb is to raise your contribution by 1% each time you get a raise, so it comes out of money you never got used to spending.

What the math leaves out

The projections are in future dollars, and they assume a steady 7% and a salary that never rises. Real returns vary, and raises would push every figure here up. Money in a traditional 401(k) is taxed when you take it out, so $2.87 million in the account isn’t $2.87 million to spend. And match formulas differ. Some plans match dollar for dollar, and some cap at 3% or 4%. Put your own formula in before drawing conclusions.

The numbers above come from the sample scenario in TheSharpDollar’s 401(k) Optimizer. Run it with your own salary and match formula.