Retirement, Investments, & Insurance for Individuals Build your knowledge How (and when) to increase your 401(k) and IRA contributions

How (and when) to increase your 401(k) and IRA contributions

Just a 1% increase in your 401(k) contribution can make a big difference. Learn how making the most of your retirement plan now could help ensure your golden years are even more golden.

Man and woman seated at a kitchen table looking at retirement contributions on a laptop computer
4 min read |

When you contribute to a 401(k), 403(b), or IRA, you may be on a path to help secure your financial future. But could you save more? Making the most of your organization’s retirement plan now may mean greater financial security once you stop working.

“How much should I save for retirement?”

We get that question a lot.

“A good rule of thumb is to try to save 10–15% of your income toward retirement,” says Stanley Poorman, a financial professional with Principal®, “but that also depends on when you get started. That may be fine if you’re 25; if you’re starting at 50, you may need to save more to retire comfortably. There’s no one-size-fits-all answer.”

Another factor is whether you have a matching contribution from your employer, and if so, what percentage the company contributes. Poorman suggests deferring enough of your pay to get that match. (Hey, it’s like free money.)

How often can you change your 401(k) contribution?

How often you can adjust your 401(k) or 403(b) contribution is generally determined by your employer and your retirement plan—it may be once a year or as often as you’d like.

If possible, reducing non-essential spending or allocating new income (maybe a year-end bonus?) could allow you to bump up the amount you’re saving.

A 1% increase only makes a small difference in your paycheck—but may make a big difference down the road. Consider the example below for a $35,000 annual income:1

Additional contribution Reduction in bi-weekly take-home pay Estimated additional monthly retirement income Total employee contributions over 30 years
5% $50 $933 $90,340
3% $30 $560 $54,204
2% $20 $373 $36,136
1% $10 $187 $18,068

Imagine if you could increase it to 10% of your pay?

Wondering how to save more toward retirement? Read: “4 little known secrets from retirement super savers.

Good news about retirement contribution limits and income ranges

If you're already maxing out your retirement accounts, here’s some good news: The IRS increased the 2024 contribution limit for employer-sponsored plans, like 401(k)s, allowing you to put away more money for retirement. Anyone enrolled in their employer’s retirement plan and still working can generally make a maximum contribution of $23,000 per year.2

And if you have a traditional or Roth IRA, your annual max contribution is $7,000.

How to make catch-up contributions to your 401(k) or IRA (if you’re old enough)

How about this cool perk once you’ve hit the big 5-0:

You can contribute an additional $7,500 to your 401(k) or 403(b) plan once you’ve reached the annual maximum amount, but only if you’re age 50 or older and it’s an option in the plan.3 And since these contributions are typically pre-tax, they’ll lower your current taxable income even more.

You can make catch-up contributions to an IRA, too. (That limit is $1,000.)

What's next?

If you have a Principal® retirement account from your employer, log in to to increase your contribution and learn about rollover options. Don’t have an employer-sponsored retirement account? We can help you set up your own retirement savings with an IRA or Roth IRA account. Questions about your IRA—how to add money or make changes? Visit our Help with IRAs page.