Planning Your 401(k).

Meet Maya and Devin. Maya earns $150,000; Devin earns $75,000. They sit near each other, they were hired the same month, and each just got the same email from HR: enroll in the 401(k). Devin assumes this is a rich-person thing he can't really afford. Maya figures she'll get to it eventually. Both are about to leave money on the table — and not a little.

A 401(k) is a workplace retirement account you fund straight from your paycheck. What makes it special isn't the account itself; it's that you rarely put in the whole amount yourself. Two forces chip in alongside you: your employer's match, which is free money, and the tax savings you get for contributing before income tax is calculated. Put together, they hand you a return the very day you contribute — before the market does anything at all.

This article follows Maya and Devin as they plan their contributions: how much to put in, how to lock in the full match, and what it grows into over a career. The happy news is that the plan is the same for both of them, and neither one has to be rich to win.

The Setup

Same match, same rules, different paychecks.

First, the part that's identical for both of them. The IRS sets a single limit on how much you can contribute from your own paycheck — $24,500 in 2026 — and it's the same for everyone. Devin and Maya can each put in right up to that $24,500; earning more or less doesn't change the cap. What does differ between them is the employer match.

Their employer offers the most common match there is: 50% of the first 6% of pay. In plain terms, if you contribute 6% of your salary, the company adds another 3% on top — for free. Contribute less than 6% and you get less of the match; contribute more and the match stops growing (the extra is all yours, just unmatched, but still pre-tax).

Because the match is a percentage of salary, the matched dollars differ. Devin's full match is 3% of $75,000, or $2,250 a year, which he unlocks by contributing 6% ($4,500). Maya's full match is 3% of $150,000, or $4,500 a year, unlocked by contributing 6% ($9,000). The $24,500 ceiling is the same for both — but reaching it takes a bigger bite of Devin's paycheck (about a third) than of Maya's (about a sixth), so the max is an easier target for Maya.

The cleanest way to see any of this is to model a single year of paychecks, which is exactly what our 401(k) Contribution Calculator does. Set the salary, drag the contribution slider, and it shows the match you capture, the taxes you save, and what the contribution really costs you. Let's use it to find the best part first.

The Day-One Return

Your money multiplies before the market opens.

Here's the idea that should change how you think about a 401(k). Suppose Devin contributes a dollar (within the match). His employer adds fifty cents. And because the dollar is pre-tax, it also trims his income taxes — for Devin, about 27 cents between federal and state. So a dollar of retirement savings costs him only about 73 cents of take-home pay, yet $1.50 lands in his account. Flip that around: each $1 that actually leaves his paycheck becomes about $2.05 in the account. That's a day-one return — the gain you lock in immediately, before a single day of investing.

And this top figure holds for every dollar you contribute up to the match cap — it's the same startling return at 2%, at 5%, and at the full 6%, not just at one magic rate. For every $1 it costs Devin's take-home pay, about $2.05 lands in his 401(k); Maya, in a higher tax bracket, does even better, at about $2.11. That's more than doubling your money the instant you contribute — more than any stock, bond, or savings account reliably offers. Contribute past the match cap and those extra dollars still help — they keep the tax savings — but they're no longer matched, so the return steps down from there. The chart below plots that figure — dollars in your account per $1 of cost — alongside the money going in, split into your share and the employer's, across every contribution rate. Flip between the two earners to compare.

Step One For Everyone

Grab the full match. It costs less than you think.

If you do one thing, do this: contribute enough to get the whole match. It's the highest-return move in personal finance, and — this is the part people miss — it barely dents your paycheck, because the tax savings soften the blow.

Devin's full 6% is $4,500 a year. After his tax savings, the actual hit to his take-home pay is about $3,285 a year — roughly $63 a week. For that $63 a week he collects $2,250 of free employer money and puts $4,500 of his own into an account that's his forever. Maya's 6% is $9,000, costing her about $123 a week in take-home to capture her $4,500 match. Neither number is nothing, but neither is the paycheck-crushing sacrifice people imagine — and both unlock a 100%-plus day-one return.

The Ceiling

The IRS max: aspirational for Devin, reachable for Maya.

The $24,500 ceiling is the same for both of them, but how big a reach it is depends on the paycheck. For Maya, $24,500 is 16% of her salary — a stretch today, but a realistic goal as her career progresses. For Devin, reaching it would mean contributing 33% of his pay, which isn't realistic on $75,000, and he absolutely doesn't need to. His plan is simple: lock in the 6% match now, then nudge his rate up a percent or two whenever he gets a raise. Every extra percent still earns him a 50–80% day-one return from the tax savings alone.

This is the reassuring truth behind the whole exercise: the biggest, easiest win — the match — is available to everyone at a modest cost, and the ceiling is something to grow toward, not a bar you must clear today.

Over A Career

Modest paychecks, real wealth.

Day-one returns are the hook; compounding is the reward. To keep this honest and easy to check, the chart below runs the exact same model as our retirement calculator: a steady 7% annual return — a common, deliberately modest long-run planning figure — from age 30 to 65, with pay held flat and no cherry-picked boom years. So the number you see here is the number the calculator gives you when you click through. Flip between the two earners, and between two contribution rates: just the match (6%) and a bit more (10%).

Notice what the two figures say together. Figure 1 shows that the return on those first dollars is enormous and identical in spirit for both earners. Figure 2 shows that even the smaller salary, contributing only enough to catch the match, compounds to nearly a million dollars — and sails well past it with a little more. Devin was wrong that this is a rich-person's game, and Maya was wrong to wait.

The Plan

Three moves, in order.

Whatever you earn, the plan is the same. First, capture the full match — contribute at least the matched percentage (here, 6%) in every paycheck. It's free money and a day-one return that more than doubles your money, and it costs less out of pocket than the sticker price because of the tax savings. Second, check the true-up — make sure your contribution schedule doesn't accidentally forfeit part of that match, and ask HR whether the plan trues up. Third, climb — raise your rate a point or two with each pay bump, working toward the IRS max if and when you can. Every extra dollar still earns a day-one return the market can't match. Get a 3% raise? Consider putting another 1% toward your 401(k): your take-home pay still grows, and your retirement savings grow even more.

Devin starts at 6% this week; Maya stops procrastinating and does the same, aiming higher over time. It's the same match and the same great deal for both of them — and a lifetime from now, two very comfortable retirements.