A lot of people end up in financial trouble come retirement because they don't save enough and end up heavily reliant on Social Security to pay their bills. But as many current retirees would probably tell you, those benefits may not get you very far.
The average Social Security benefit among retired workers today is a little over $2,000 a month. That's not a particularly large income, and it may be a lot less than what you're used to living on now.
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A good way to supplement your Social Security is to save well for retirement during your working years. And if you have access to a 401(k) plan through your job, you may have a good opportunity to build a solid nest egg.
Fidelity recommends that workers set aside 15% of their income for retirement savings purposes. But are workers today actually doing that? Let's find out.
What the average 401(k) savings rate looks like
Based on its most recent data for the third quarter of 2025, Fidelity puts the average 401(k) savings rate at 14.2% of income, which is close to its suggested 15% amount. However, 401(k) savers aren't doing all of the work alone.
The typical employee contribution rate to a 401(k) plan is 9.5%, says Fidelity. But with an average employer contribution rate of 4.7%, we get to 14.2%.
This goes to show how important it is to claim your workplace 401(k) match in full. Any money you give up is money you not only lose out on initially, but miss out on the opportunity to invest. And over time, that could be a very big deal.
Let's imagine your employer will match 4.7% of your $80,000 paycheck. That means you'd need to contribute $3,760 to get your full match. If you only contribute $200 a month to your 401(k), or $2,400 in total, you'll be giving up $1,360.
Now you might think that giving up $1,360 in a single year is not a big deal. And it may be tough to find the extra money for your 401(k) if your bills have increased.
But let's imagine you give up $1,360 in employer matching dollars at age 27 and don't retire until 67. If your 401(k) gives you an annual 8% return, which is a bit below the stock market's average, that $1,360 could turn into a little more than $29,500 over 40 years. That's a much bigger deal.
We just learned that the typical retiree on Social Security today collects about $24,000 a year. So by giving up a portion of your workplace match for a single year, you could end up forgoing the equivalent of more than a year of Social Security income. Ouch.
Be mindful of that match -- and do what you can to snag it
While it's not always easy to take advantage of a workplace 401(k) match, it's in your best interest to try. First, make sure you know what your company's match entails, as requirements could change from one year to the next.
From there, figure out ways to boost your 401(k) contribution rate. If you're getting a raise in the new year, one thing you could do is send a portion of it into your 401(k) from the start. The extra money going into your retirement plan is money you shouldn't miss, since you won't be used to spending it.
You can also, if need be, turn to the gig economy to boost your income and increase your 401(k) savings rate. Earning an extra $200 a month driving for a ride-hailing service or watching people's pets could free up $200 more for your 401(k).
It's encouraging to see that 401(k) participants today are setting aside a good portion of their income for long-term savings. And you should realize that your workplace match could be your ticket to doing the same. So do your best to snag that money every year, since giving up even a small amount could have bigger consequences than you might expect.
