Saving for retirement is a lifelong process, one that evolves as your career, income, and goals change. For many people, a 401(k) or similar employer‑sponsored plan forms the foundation of their long‑term financial security. Starting early is ideal, but what matters most is ensuring your strategy adapts as your life and circumstances shift.
Rather than focusing on a single “magic number,” it can be more helpful to use simple benchmarks tied to your current salary. These milestones offer a clear way to assess whether you’re progressing toward a comfortable retirement.
- By age 35: Aim for roughly 1–2× your annual salary saved
- By age 50: Target 3–6× your salary
- By age 60: A range of 6–11× your salary may be appropriate
These ranges are intentionally broad. Career paths, financial responsibilities, and retirement visions vary widely. The goal is not perfection, but awareness and flexibility.
Below are key considerations at each stage of your career.
Early Career: Building the Foundation
In your early working years, competing financial priorities can make saving feel challenging. Still, two factors make early contributions especially powerful:
- Time in the market: Even modest contributions have decades to grow.
- Employer match: If your employer offers one, contribute at least enough to receive the full match. It’s essentially free money.
With a long investing time horizon ahead (20+ years), a higher‑equity allocation (often 80–100% equities, depending on comfort level) may be appropriate.
Mid Career: Increasing Momentum
As your income grows, so does the opportunity to maximize tax‑advantaged savings. In 2025, the 401(k) maximum employee contribution limit is $23,500. Reaching this limit can meaningfully accelerate your long‑term growth. Depending on your employer, additional savings strategies may also be available. Understanding those options or partnering with a fiduciary advisor who can help you evaluate and implement them, ensures your decisions align with your broader financial goals.
A higher equity allocation may still be suitable at this stage, however, be mindful of company stock exposure. Concentrated positions can increase risk, so it’s important to maintain a balanced, diversified portfolio.
Late Career: Age 50+
Beginning at age 50, you can make catch‑up contributions (an additional $7,500 in 2025), for a total of $31,000. These years often coincide with peak earning potential, making them a critical window for strengthening your retirement readiness.
As retirement approaches, many people begin to reduce equity exposure. However, because you may still have many years of investing ahead, even into retirement, it’s important to evaluate whether continued growth remains appropriate for your goals.
The “Super Catch-Up” Provision
As you move into your early 60s, an additional opportunity becomes available through the SECURE Act 2.0, it’s called the “super catch‑up” provision. Individuals ages 60–63 can contribute a higher catch‑up amount (up to $11,250 in 2025), compared to the standard $7,500 catch‑up available starting at age 50. This expanded window is designed to help late‑career earners accelerate savings during the years when income is often at its peak. While employer adoption may vary, understanding whether your plan offers this enhanced contribution can meaningfully influence your retirement strategy and long‑term planning decisions.
Important Changes for High-Income Wage Earners
High‑income earners face an important change beginning in 2026. Under the SECURE Act 2.0, employees whose prior‑year FICA wages exceed the IRS threshold (will be set at $150,000 in 2026, indexed for inflation) must make all age‑50+ catch‑up contributions on a Roth, or after‑tax, basis.
2026 threshold: $150,000, adjusted for inflation
- Employees with more than $150,000 in FICA wages in 2025 must make all 2026 catch‑up contributions as Roth.
- This applies to 401(k), 403(b), and governmental 457(b) plans and is determined strictly by FICA wages, not by the traditional Highly Compensated Employee (HCE) definition.
Pre‑tax catch‑up contributions are no longer permitted for this group. For those affected, this shift increases taxable income in high‑earning years but also allows future withdrawals to be tax‑free, making it essential to evaluate how Roth catch‑up dollars fit into your broader retirement and tax strategy.
Your Asset Allocation Matters
Regardless of age, your asset allocation is one of the most important drivers of long‑term outcomes. A diversified mix of investments helps manage volatility and keeps your portfolio aligned with your risk tolerance.
Over time, market movements can shift your allocation away from your intended targets. Rebalancing at least annually helps maintain discipline and keeps your strategy aligned with your goals.
If you have multiple 401(k)s from previous employers, be sure to review them as part of your overall allocation. Your risk profile should reflect your entire portfolio, not just your current plan.
The Bottom Line
A 401(k) is one of the most effective tools for building long‑term financial security. Your goals, income, and circumstances will evolve throughout your career, but consistent contributions and thoughtful adjustments along the way can help you stay on track for a confident and comfortable retirement.
Disclaimer: This article is provided for educational, general information, and illustration purposes only and is not exhaustive. Diversification and/or any strategy that may be discussed does not guarantee against investment losses but are intended to help manage risk and return. If applicable, historical discussions and/or opinions are not predictive of future events. The content is presented in good faith and has been drawn from sources believed to be reliable. Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, or investment advisory services. We encourage you to consult a financial planner, accountant, and/or legal counsel for advice specific to your situation. Reproduction of this material is prohibited without written permission from Martos Wealth Management, LLC, and all rights are reserved.
