The days when companies would provide pensions for their employees are rapidly dwindling. Today, workers are primarily responsible for saving enough money for their retirements.
The good news? Workers can choose from many retirement plans, from 401(k) plans to IRAs to Simplified Employee Pensions.
No matter what plan your company offers—or whatever you invest in if you are a self-employed worker—your job is to maximize your retirement savings during your working years.
Maximizing Your Retirement Savings
Richard Lichtig, a partner with accounting firm Eisner Amper, recommends that employees take advantage of two investing strategies: dollar-cost averaging and maximizing an employer's matching contribution.
In dollar-cost averaging, workers buy a fixed dollar amount of a particular investment on a set schedule, no matter what that investment's share price happens to be. That gives employees the chance to buy more shares when the price per share of an asset is low and fewer shares when the price per share is high. This reduces the risk of making a substantial purchase when the investment is at its peak price.
Another sound investment technique is maximizing an employer’s matching contribution in a 401(k) plan.
As Lichtig notes, many employers allow their workers to invest up to 15 percent of their salary in 401(k) plans and match half of the first 5 percent of contributions. Employees could cost themselves money by contributing their entire yearly amount early in the year instead of spreading it out.
Lichtig offers an example: An employee earning $360,000 annually wants to contribute the maximum $24,500 to their 401(k) plan in 2026.
If the employee contributes 15 percent of their salary, they would reach the annual contribution limit by mid-year, contributing $4,500 per month. Because contributions stop once the cap is reached, the employee only receives the employer match for part of the year. Assuming the employer matches 50 percent of employee contributions up to 5 percent of pay, the total employer match would be approximately $4,100.
However, if the employee spreads contributions evenly throughout the year, contributing about $2,042 per month, or roughly 6.8 percent of salary, they would still reach the same $24,500 annual contribution by year-end. In this case, the employee receives the employer match in every pay period, resulting in a total employer contribution of $9,000, which is the full match available on a $360,000 salary.
This example highlights how contribution timing can significantly impact the total employer match an employee receives, even when the employee contributes the same annual amount.
Contribution Limits
In 2026, workers can contribute up to $24,500 annually to their 401(k) and 403(b) plans. The catch-up contribution limit for those 50 or older is $8,000.
- Workers under 50 who save approximately $2,042 a month or $471 a week will reach the maximum contribution limit for the year.
- Workers aged 50 and older will need to save $2,708 a month or $625 a week to take full advantage of the catch-up contribution.
It’s essential for workers who directly deposit funds into their 401(k) plans from their paychecks to adjust their contribution percentages annually to account for changes in the contribution limits. Employees should work with their employer’s payroll department to ensure the maximum contribution is deducted from their paychecks.
Key Takeaway
While not every worker can contribute the maximum amount each year, it’s vital to contribute enough to capture any employer match offered. Employer matching contributions provide "free money" that can significantly boost your retirement savings over time. Combining employer contributions with consistent savings and strategies like dollar-cost averaging can help you achieve a secure retirement.