401(k) Savings Rates Just Reached a High. Here’s How to Find More Money for Your Retirement Savings

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Data shows that retirement savers are upping their game. Read on to see how you can do the same. [[{“value”:”

You probably know that it’s important to save for retirement to ensure you have enough money to cover your expenses later in life. And many experts, Fidelity included, recommend socking away at least 15% of your income in an individual retirement account (IRA) or 401(k).

Of course, if you can save more, great. But many agree that 15% is the minimum contribution target workers should aim for.

But is a 15% savings rate realistic? As it turns out, yes.

Workers are upping their retirement plan contributions

Recent data from Fidelity finds that the average 401(k) savings rate just reached a record high of 14.2%. This is largely in line with its 15% recommendation.

However, this doesn’t mean that everyone is able to save close to 15% of their income for retirement. And if you’re unable to right now, that’s okay. But there are a couple of steps you can take to increase your savings rate.

1. Snag your full 401(k) match

The average 14.2% contribution rate for 401(k)s is a combination of employee contributions (9.4%) and employer matches (4.8%). In other words, workers are contributing 9.4% of their earnings, while their employers are kicking in 4.8% to get them to the 14.2% mark.

If your workplace 401(k) plan offers a match, do your very best to contribute enough money from your paychecks to claim it in full. That’s free money that can go into your account, and you can invest it along with your own contributions for added growth. And if you’re not sure how much your employer will match, just ask your in-house benefits coordinator.

2. Pick up a side hustle

If you need the bulk of your paycheck to cover essential bills, working a side hustle is a great way to find more money for your 401(k). That way, you don’t have to start slashing expenses, which many people find difficult to do — perhaps more difficult than spending a few extra hours working each week.

A side job might also give you more spending flexibility and improve your quality of life. It pays to explore different options, whether it’s work you do from home or a gig you do outside the home but on your own schedule, like driving for a ride-hailing company.

What can saving 14.2% of your income do for you?

Median weekly earnings for full-time workers were $1,143 in the second quarter of 2024, says the Bureau of Labor Statistics. That’s $59,436 per year. Saving 14.2% of that, whether on your own or with the help of an employer, means contributing $8,440 a year to a 401(k).

Let’s assume that sum is contributed in 12 equal parts during the year over a 30-year period (even though typical wages are very likely to grow in three decades). At a 10% return, which is in line with the stock market’s average, you’re looking at a balance of almost $1.4 million.

So clearly, it pays to try to get as close to Fidelity’s 15% recommendation as you can. It could do a lot of good for your retirement.

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The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Maurie Backman has positions in Target. The Motley Fool has positions in and recommends Target. The Motley Fool has a disclosure policy.

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