“Most people ought to contribute the maximum,” says Roger C. Hewins III, President of Team Hewins, LLC in Redwood City, California. “The power of compounding is amazing. You need to put it to work for you starting as early as possible. People typically don’t think hard enough about how much they will need to retire and how long it will take to save and invest enough to have financial security. If you cannot do so now, try at least to contribute the amount to get the full employer match. It is free money. Then work your way to the maximum depending on cash flow needs.”
No matter how you slice it, it starts with a minimum savings rate that’s high enough to capture the full company match, and ends with a savings rate that allows you to contribute the maximum allowable by law.