What Does It Mean to Max Out Your 401(k)?

Maxing out your 401(k) means that you contribute the maximum amount allowed by law in a given year, as specified by the established 401(k) contribution limits. But it can also mean that you’re maxing out your contributions up to an employer’s percentage match, too.

Is It Good to Max Out Your 401(k)?

Generally speaking, yes, it’s a good thing to max out your 401(k) so long as you’re not sacrificing your overall financial stability to do it. Saving for retirement is important, which is why many financial experts would likely suggest maxing out any employer match contributions first.

What Happens If You Contribute Too Much to Your 401(k)?

After you’ve maxed out your 401(k) for the year — meaning you’ve hit the contribution limit corresponding to your age range — then you’ll need to stop making contributions or risk paying additional taxes on your overcontributions.

Will You Have Enough to Retire After Maxing Out 401(k)?

First and foremost, you’ll need to consider your lifestyle and where you plan on living after retirement. If you want to spend a lot in your later years, you’ll need more money. As such, a 401(k) may not be enough to get you through retirement all on its own, and you may need additional savings and investments to make sure you’ll have enough.

What happens if I max out my 401(k) every year?

Assuming you don’t overcontribute, you should see your retirement savings swell if you max out your 401(k) every year, and hopefully, be able to reach your retirement and savings goals sooner.

Free Flight Credit Card

🎉 Get a 1% match on IRA contributions and 401(k) rollovers. Learn more

Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or other eligible status, be residing in the U.S., and meet SoFi's underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates reserved for the most creditworthy borrowers. If approved, your actual rate will be within the range of rates at the time of application and will depend on a variety of factors, including term of loan, evaluation of your creditworthiness, income, and other factors. If SoFi is unable to offer you a loan but matches you for a loan with a participating bank, then your rate may be outside the range of rates listed above. Rates and Terms are subject to change at any time without notice. SoFi Personal Loans can be used for any lawful personal, family, or household purposes and may not be used for post-secondary education expenses. Minimum loan amount is $5,000. The average of SoFi Personal Loans funded in 2023 was around $33K. Information current as of 2/26/24. SoFi Personal Loans originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org). See SoFi.com/legal for state-specific license details. See SoFi.com/eligibility for details and state restrictions.

✝ To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

TLS 1.2 Encrypted

Equal Housing Lender

“Free Flight Credit Card”

Guide to Maxing Out Your 401(k)

The Pros and Cons of Unpaid Internships

Fun Money: How Much to Allocate When You Have Student Loans

Top 10 Fun Things to Do When Visiting Fort Lauderdale

The Strategic Guide to Early Retirement

“Free Flight Credit Card”

Guide to Maxing Out Your 401(k)

The Pros and Cons of Unpaid Internships

Fun Money: How Much to Allocate When You Have Student Loans

Top 10 Fun Things to Do When Visiting Fort Lauderdale

The Strategic Guide to Early Retirement

Student Loan Refinancing

Personal Loans

Online Investments

Other

Student Loan
Refinancing

Personal
Loans

Online
Investments