Skip to Content
Older couple dancing at party symbolizing that they are enjoying retirement.
Retirement Planning

401K contribution limits

A 401k can be a great way to save for retirement. Individuals should take full advantage of contributing but must realize there are annual limits.

Are you aware that there are annual limits on how much you can contribute to your 401(k)?

As of 2018, the 401k contribution limit is $18,500 a year, unless you're over age 50. Individuals age 50 and over are allowed to make an additional “catch-up” payment of $6,000 per year, bringing their annual max allowed contributions to $24,000. If you're in a position to invest the max into your 401(k), the tax breaks can make it extremely worthwhile.

If these amounts just aren't feasible, it's still important for you to start saving for retirement. For example, try starting off small and setting aside five percent of your monthly income into a savings account for several months, and then assess whether it affects your ability to meet your monthly obligations. If not, move the money to an IRA and continue to make regular deposits. Just be sure not to contribute above the IRA contribution limit of $5,500 ($6,500 for those 50 and over).

If your employer offers a 401(k) as part of your employee benefits package, you should be taking advantage of it, especially if they offer some type of matching program. That's essentially free money that you might be leaving on the table, so don't miss out!

Everyone's situation is different

There's a lot of conflicting advice as to how much you should be putting into your 401(k). Some say putting 10 percent aside each year for the entirety of your career should allow you to retire comfortably once you add in Social Security benefits, while others argue that something closer to 15 percent is best.

The fact is, how much you should be saving for retirement is an individual choice, as there are plenty of financial factors to consider. For example, do you have a large amount of credit card debt, student loans, or other financial obligations that you're trying to get under control? Do you have an emergency fund established?

Everyone's situation is unique and there isn't a one-size-fits-all approach as to how much you should be socking away into your 401(k). If you feel that you might need some help when it comes to retirement planning, then consider speaking with a qualified financial advisor who can help.



Arrows linking indicating relationship

Related Articles

Senior man out biking along a beautiful mountainside background.

Why you may want to consider senior life insurance

Learn more
A woman smiling as she looks up from a computer while searching for information.

3 Online calculators to determine how your 401(k) contributions are adding up

Learn more
An Asian American couple reviews their social security and retirement planning goals while sitting in their kitchen.

Social Security facts

Learn more

All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and is meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries.

Learning Center articles may describe services and financial products not offered by Protective Life or its subsidiaries. Descriptions of financial products contained in Learning Center articles are not intended to represent those offered by Protective Life or its subsidiaries.

Neither Protective Life nor its representatives offer legal or tax advice. We encourage you to consult with your financial adviser and legal or tax adviser regarding your individual situations before making investment, social security, retirement planning, and tax-related decisions. For information about Protective Life and its products and services, visit

Companies and organizations linked from Learning Center articles have no affiliation with Protective Life or its subsidiaries.