If you're not convinced that saving for retirement is important, here's a wakeup call. The average Social Security recipient today only collects a little more than $2,000 a month.
Now, think about your expenses -- everything from housing to healthcare to food. Would $2,000 a month cut it? Probably not.
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For this reason, it's important to have retirement income outside of Social Security. And saving on your own is a great way to supplement those monthly benefits.
Of course, you have choices when it comes to building retirement savings. Anyone with earned income can contribute to an IRA. But if your employer offer a 401(k) plan, it could pay to sign up.
The nice thing about 401(k)s is that contributions are made as automatic payroll deductions. This means you don't have to worry about transferring money to your 401(k) every month. Just tell your employer how much you want to contribute, and your payroll department will take care of the rest.
Another benefit of 401(k)s is that they have much higher contribution limits than IRAs. And in 2026, those limits are rising even more.
Introducing the new 401(k) limits
In 2025, savers under 50 can contribute up to $23,500 to a 401(k). Savers 50 and over get a $7,500 catch-up, bringing their total allowable contribution to $31,000.
In 2026, these limits are increasing. Savers under age 50 will be able to contribute up to $24,500 to their 401(k)s, while the catch-up contribution for savers 50 and over is rising to $8,000. This means older workers will be able to put a total of $32,500 into a 401(k) plan next year.
Savers between the ages of 60 and 63 get an even higher 401(k) contribution limit in 2026. Thanks to changes that were part of Secure 2.0, people in this specific age range can make a 401(k) catch-up of $11,250 this year instead of $7,500.
Next year, that limit is staying the same. But because the limit for savers under 50 is increasing, people aged 60 to 63 will be able to contribute up to $35,750 to a 401(k) in 2026.
Do this if you can't max out your 401(k)
Maxing out your 401(k) is a great way to build a sizable retirement nest egg while potentially shielding a good amount of income from taxes. And even if you opt for a Roth 401(k), which gets funded with after-tax dollars, the more money you contribute, the more tax-free growth you might enjoy.
But because 401(k) plan limits are very high already, and are increasing in 2026, maxing out may not be an option for you. If that's the case, the one thing you should try to do is contribute enough to claim your employer 401(k) match in full.
Matching dollars are basically free money from your employer. And if you don't get your match in full, you don't just give up that exact money -- you give up lost gains.
Imagine, for example, that you miss out on a $2,000 employer match this year. Invested at an 8% return (which is a bit below the stock market's average) over 40 years, that $2,000 could grow to almost $43,500.
For this reason, giving up even a portion of your employer match is probably a bigger deal than you might imagine. So even if maxing out your 401(k) is off the table for 2026, you should try your best to claim that workplace match in full.
You may need to cut back on some expenses or even work a side hustle to get that match. But it could pay off tremendously in the long run.
