Most first jobs ask you to pick a 401(k) contribution in your first week, usually before your first paycheck. Leave it blank and you may be enrolled at a default rate, or not at all. Here's how to choose on purpose.
Step 1: Get the full match. No exceptions.
An employer match is money your employer adds when you contribute. A common formula is "50% of what you put in, up to 6% of pay." On a $54,000 salary, contributing 6% ($3,240 a year) gets you $1,620 from the employer. That's an instant 50% return before any investing happens. Nothing else in personal finance pays like that.
Read your plan's exact formula in the benefits packet. If you only remember one thing: contribute at least enough to get every dollar of match.
Step 2: Check the vesting schedule
Vesting decides when the employer's money is actually yours. Some plans vest immediately; others vest over two to six years. If you leave before you're vested, you lose some or all of the match (never your own contributions). It matters if you expect to job-hop in year one or two.
Step 3: Decide what comes after the match
Past the match, the 401(k) competes with three other uses for the money:
- An emergency fund. Without one, any surprise goes on a credit card. See how big it should be.
- High-interest debt. Credit cards at 20%+ beat any investment return. Pay them first.
- A Roth IRA. Often a better next dollar than the 401(k) for low earners. See Roth IRA vs. 401(k).
2026 limits
| Account | 2026 limit |
|---|---|
| 401(k) / 403(b) employee contribution | $24,500 |
| IRA (traditional or Roth) | $7,500 |
You won't hit the 401(k) limit on a first-job salary, and you don't need to. The match is the goal; the limit is a ceiling.
Traditional or Roth 401(k)?
If your plan offers both: traditional lowers your tax bill now; Roth means tax-free money in retirement. Early in a career, when your tax bracket is probably the lowest it will ever be, Roth often makes sense. The employer match usually goes into the traditional side either way.
A simple starting rule: contribute exactly the percentage that gets the full match. Raise it by 1% every time you get a raise. You won't feel it, and five years from now the habit is worth more than any stock pick.
Comparing offers?
A better match can outweigh a higher salary. Put both into the job offer comparison calculator and see the real difference in dollars.
Questions
What percent should I put in my 401(k) at 22?
At minimum, whatever gets your full employer match, often somewhere between 3% and 6% of pay depending on the plan. Past that, build an emergency fund and clear any credit card debt before raising it.
Is it bad to not contribute to a 401(k) at my first job?
If there's a match, skipping it means turning down part of your pay. If there's no match, it's less urgent; a Roth IRA may be a better first account.
What happens to my 401(k) if I leave my job?
Your own contributions are always yours. You can leave the money in the old plan (if the balance is large enough), roll it into your new employer's plan, or roll it into an IRA. Unvested employer match is forfeited.
What should I invest in inside my 401(k)?
For most new grads, a target-date fund near the year you'll turn about 65, or a broad, low-cost index fund. Check the expense ratio; lower is better.