Just 14% of Workers Hit This 401(k) Benchmark—Learn How To Set It as Your Target Today

Core Insights - The U.S. retirement system reveals that a significant portion of workers are under-saving for retirement, with only one-third of non-retirees believing their savings plans are on track in 2023 [2] Retirement Savings Trends - A notable 14% of participants in defined contribution plans managed by Vanguard contributed the annual maximum for employee elective deferrals [3][9] - The annual maximum contribution is $23,500, increasing to $31,000 for individuals aged 50 and above, and potentially up to $34,750 for older workers due to the SECURE 2.0 Act [4] Contribution Patterns - Higher earners are more likely to reach the maximum contribution limits, with 49% of those earning over $150,000 annually hitting the max, compared to only 2% of those earning between $75,000 and $99,999 [6] - Even individuals with modest incomes can aim to maximize their 401(k) contributions to benefit from employer matching and compound interest [7][9] Compounding Benefits - The power of compounding returns emphasizes the importance of early and maximum contributions, as illustrated by a scenario where saving the maximum for five years could lead to over $2.8 million by age 65 if left to grow [8]