Retirement Planning in 2026: How Much to Save, the New Contribution Limits, and Which Account to Fund First

Most retirement advice starts with a rule of thumb about saving 10% or 15% of pay. The number that matters is narrower: the gap between what you will spend and what Social Security and any pension will pay, divided by a withdrawal rate you trust. This guide works through that calculation, then covers the 2026 contribution limits, the new rule that forces some catch-up contributions into Roth accounts, and the order in which to fill your accounts.

It covers the saving years. Turning savings into a paycheck, including withdrawal rates, Social Security claiming, and required minimum distributions, is in our retirement income guide. Buying guaranteed income is in our annuities guide, and retiring in your 40s or 50s is in our FIRE guide.

Start from spending, then subtract guaranteed income

A savings target has three inputs:

1. What you expect to spend each year in retirement, in current dollars. Include income taxes, Medicare premiums, and irregular costs such as cars and home repairs, not only the monthly budget.
2. What Social Security and any pension will pay. Your estimate is in your my Social Security account; use the figure for the age you actually plan to claim.
3. A withdrawal rate. Morningstar's December 2025 research puts the highest safe fixed starting rate at 3.9% for a 30-year retirement, assuming a 90% chance of money remaining and 30% to 50% in stocks. It found retirees willing to cut spending after bad years could start near 6%.

Divide the gap between items 1 and 2 by item 3 and you have a target. Our retirement income guide explains where those withdrawal rates come from and when a higher one is reasonable.

Illustration: a 40-year-old earns $110,000, has $180,000 saved, and plans to retire at 67. They expect to spend $80,000 a year in current dollars, and their Social Security statement shows about $32,000 a year at 67.

The 4.7% row uses the rate William Bengen, whose 1994 study started the "4% rule," arrived at in his 2025 book with a more diversified portfolio. The difference between the two rows is about $210,000, which is why the withdrawal rate deserves as much thought as the return assumption.

How much the 40-year-old has to save depends on returns. The figures below are in current dollars, so the yearly amount is meant to rise with inflation, and it includes any employer match.

The returns are our assumptions, not forecasts. Two variations at the 4% return show how sensitive the answer is:

• Waiting five years before saving anything new raises the yearly amount to $20,783, or 18.9% of pay, because the same gap has to be closed in 22 years instead of 27.
• Planning on 78% of the Social Security estimate raises the target to $1,411,282 and the yearly saving to $18,951 (17.2% of pay). That haircut is not arbitrary: the 2026 Trustees Report projects the retirement trust fund running out of reserves in late 2032, after which incoming taxes would cover 78% of scheduled benefits unless Congress acts.

Run your own numbers every few years. Spending estimates made at 40 are rough, and they get better as retirement gets closer.

The 2026 contribution limits

These come from the IRS 2026 limits announcement and Notice 2025-67, with HSA limits from Rev. Proc. 2025-19.

Income limits still apply to IRAs. Direct Roth IRA contributions phase out between $153,000 and $168,000 of modified AGI for single filers and between $242,000 and $252,000 for married couples filing jointly. A traditional IRA contribution is always allowed, but if you are covered by a workplace plan the deduction phases out between $81,000 and $91,000 (single) or $129,000 and $149,000 (joint).

Here is the most a person can put into a 401(k), an IRA, and a self-only HSA in 2026, before any employer money:

The higher catch-up depends on the age you reach by December 31, so someone who turns 60 in November can use it for all of 2026, and someone who turns 64 loses it for the whole year. Ask your plan administrator whether the plan has adopted it.

The Roth catch-up rule for higher earners

SECURE 2.0 added a rule that took effect on January 1, 2026. If your FICA wages (box 3 of your W-2) from the employer that sponsors your plan were more than $150,000 in 2025, any catch-up contributions you make to that plan in 2026 must be designated Roth. The IRS summarizes it on its catch-up contributions page.

How it works in practice:

• The test looks only at wages from that employer. A new job in 2026 means no prior-year wages from the new employer, so the rule doesn't apply there for the first year.
• The regular $24,500 can still go in pre-tax. Only the catch-up portion is affected.
• If your plan has no Roth option, you can't make catch-up contributions to it at all.
• The final regulations, published September 16, 2025, generally apply from 2027. For 2026, plans may follow a reasonable, good-faith reading of the statute, so the mechanics (for example, whether your plan automatically treats a catch-up as Roth) vary from employer to employer.

Illustration: a 61-year-old paid $180,000 in 2025 puts $11,250 of catch-up into their 401(k) in 2026. Because it has to be Roth, they lose the deduction and pay $2,700 more federal tax this year in the 24% bracket, or $3,600 in the 32% bracket. In exchange, that money and its growth come out tax-free later and aren't subject to required minimum distributions while they are alive. Whether that trade is good depends on the next question.

Pre-tax or Roth

With the same tax rate now and later, the two come out even. Illustration: someone in the 24% bracket can put $10,000 into a pre-tax account or, for the same take-home cost, $7,600 into a Roth. After 20 years at 6% a year:

So the choice is a bet on your future tax rate. Pre-tax contributions usually win for people in a high bracket now who expect lower income in retirement. Roth contributions tend to win early in a career, for people expecting large pre-tax balances that will produce big required distributions, and for couples where the survivor will file as a single taxpayer on nearly the same income. Holding some of each lets you choose which to draw from each year. Our investment tax planning guide covers Roth conversions, the brackets where they make sense, and Medicare's income surcharges.

Which account to fund first

Once you have an emergency fund and no high-interest debt, a sensible order for most employees is:

1. The 401(k), up to the full employer match. On a $110,000 salary, a match of 50% on the first 6% of pay adds $3,300 a year; a 100% match on the first 4% adds $4,400. Few other uses of money return that much immediately.
2. An HSA, if you have a qualifying high-deductible health plan. Contributions are deductible, growth is untaxed, and withdrawals for medical costs are tax-free. If you can, pay current medical bills from your checking account, keep the receipts, and let the HSA stay invested; you can reimburse yourself later. After 65, withdrawals for other purposes are taxed as income without the 20% penalty, and you can't contribute once you are enrolled in Medicare (IRS Publication 969).
3. A Roth or traditional IRA. An IRA usually offers wider and cheaper fund choices than a 401(k). Above the Roth income limit, some people contribute to a traditional IRA without a deduction and convert it; that "backdoor" works cleanly only if you have no other pre-tax IRA money, because conversions are taxed in proportion to all your IRA balances.
4. The rest of the 401(k), up to $24,500 plus any catch-up.
5. After-tax 401(k) contributions, if the plan accepts them and allows in-plan Roth conversions or withdrawals, up to the $72,000 total limit. This is sometimes called a mega backdoor Roth.
6. A taxable brokerage account, which has no limits and no withdrawal rules, and is taxed at capital gains rates on growth.

Two common reasons to change the order: a 401(k) whose funds charge high fees (then fund the IRA before going past the match), and a plan to retire before 59½, which makes taxable savings and Roth contributions more useful because they can be reached without penalties. Our FIRE guide covers the early-access rules.

Investing what you save

Contribution limits and account order matter less than two things you control: how much you save and what you pay in fees. A target-date fund or a two- or three-fund mix of low-cost index funds is enough for most people; our index fund guide shows how a 1% annual fee compounds against a 0.03% fund. Once you hold several accounts, put tax-inefficient holdings such as bonds in tax-deferred accounts where you can, as described in our tax-efficient investing guide, and rebalance on a schedule, as in our rebalancing guide.

A yearly check

• Update the spending estimate and download a new Social Security statement.
• Raise contributions when your pay rises, and check the next year's IRS limits, which are usually announced in October or November.
• Note whether your wages from your employer will pass the Roth catch-up threshold, which is indexed for inflation.
• Confirm your beneficiaries on every account. Retirement accounts pass by beneficiary form, not by will; our estate planning guide covers the rest.
• Rebalance, and recheck the target with the return you actually earned.

Where this method needs adjusting

• Pensions: subtract the pension from spending along with Social Security, and check whether it has a cost-of-living adjustment. A fixed pension loses about a quarter of its buying power over ten years at 3% inflation.
• Business owners: a solo 401(k) or SEP IRA can take up to $72,000 a year in 2026, which changes the math. The limits above apply per person across all plans for employee deferrals, but the $72,000 total applies per unrelated employer.
• Early retirement: a 3.9% rate is built for 30 years. Longer retirements need a lower rate or more flexibility, as our FIRE guide explains.
• Couples: run the numbers for the household and again for the survivor, who keeps the larger of the two Social Security benefits but not both.

If you want help, look for an adviser who is a fiduciary for all of your accounts and is paid in a way you understand; our guides to what "fiduciary" means and choosing a financial advisor cover how to check.

This guide is for informational purposes only and does not constitute investment, tax, or legal advice. Contribution limits and rules are as of September 2026 and change each year; confirm current figures with the IRS and your plan administrator. Illustrations use assumed returns and are not forecasts. Consult qualified professionals about your situation.