The financial decisions you make today can shape how you live in the future. Balancing spending and saving can be a challenge: Empower research shows only 11% of Americans with a retirement plan feel like they’re saving enough, and more than half (61%) wish they had started saving earlier. 

Saving a little more over time can add up to big savings — just 1% more into a tax-advantaged retirement account like a 401(k), 403(b), or an IRA could make a noticeable difference. How much?

Let’s look at some examples.* 

How to calculate what an extra 1% could mean for your savings balance 

Use the Empower 401(k) calculator to estimate how much more you could accumulate by saving 1% more now.

1. Use the calculator to estimate what your 401(k) will be worth when you retire using your current yearly contribution amount. Make a note of the result as ‘Scenario A’. 

2. Next, take your current yearly contribution amount and increase it by 1%. For example, if you are currently contributing $10,000 a year, your new hypothetical contribution would be $11,000. 

3. Now, rerun the estimate using the calculator, this time entering the new hypothetical contribution amount. Make a note of the result as ‘Scenario B.’ 

4. Finally, subtract the dollar amount of Scenario A from Scenario B. This number is the amount of extra savings you would have accumulated (with interest) by saving an additional 1% each year. 

While this calculation uses a 1% increase as an example, the same method applies for calculating any percentage increase.  

When is the right time to increase your savings? 

They say the best time to plant a tree was 20 years ago; the second-best time is now. The same can be said for saving and investing. The sooner you start saving, the more time your money has to potentially grow. Not only will your initial investments have the potential to grow over time, but any earnings could also produce earnings – this is known as compounding. 

Ideally, you should consider increasing the amount you contribute to your retirement savings each year. The degree to which you increase the percentage of your paycheck that goes toward retirement will depend on your personal circumstances, including how much discretionary income you have left over after paying necessary expenses, like housing, taxes, and food, and making the minimum payments on any outstanding debts. 

Read more: Essential steps for retirement planning 

Making the most of compound earnings 

Compounding is the process in which an asset's earnings are reinvested to help accelerate the growth of your account over time.  

Here’s how it works. Suppose one investor deposits $5,000 into a high yield savings account with an annual percentage yield (APY) of 4.5%. Even if the investor makes no additional deposits, after one year, the account balance would grow by about $225. 

As time goes on, both that extra $225 and the original $5,000 will continue to earn a return. With a continued APY of 4.5% and no additional deposits, the account balance would total $5,708.83 at the end of 3 years.  

If the investor also made monthly contributions of $100 during the three-year period, those additional deposits would also earn a return. After 3 years, the investor would have contributed $8,600, but because of compound earnings, the account balance would total $9,547.28 at the end of the third year. 

Try this: Empower’s ‘Growing your investments’ calculator shows how much your investments may earn over time  

How much to save for retirement  

There’s no one-size-fits-all answer to this question — it will be different for everyone based on a number of factors: time horizon until retirement, anticipated income in retirement, longevity and desired retirement lifestyle. 

However, many experts recommend saving 10% and 15% of your annual pretax income for retirement. So, if your annual gross income — before taxes and other payroll deductions are taken out — is $100,000, for example, your goal would be to save between $10,000 and $15,000 each year.  

In 2024, you can contribute up to $23,000 to your 401(k), up from $22,500 for 2023. In addition, there is a $7,500 catch-up contribution allowed if you are 50 or older.¹

What if you don’t have a 401(k)? 

If you don’t have a 401(k) through an employer, you can still save for retirement using a tax-advantaged retirement account, such as an Individual Retirement Account (IRA). In 2024, the annual contribution limit for IRAs, including Roth and traditional IRAs, is $7,000.² If you’re 50 or older, you can contribute an additional $1,000 annually.  

If you work at a public school or university, church, or a tax-exempt organization, you may have the option to contribute to a 403(b) plan. Similar to a 401(k), a 403(b) plan is a type of retirement plan that allows employees to save and invest for retirement while receiving certain tax advantages. You can contribute up to $23,000 in 2024. 

Read more: Roth vs traditional IRAs: Which should I choose? 

5 ways to boost your retirement savings 

Incrementally increase the percentage you save: As you’ve seen here, a small increase in saving can result in a big increase in your retirement nest egg over time. Each year, aim to increase the percentage of your paycheck that you allocate towards retirement savings. If you contributed $10,000 last year, aim to increase that to $1,000 this year, for example. 

Maximize your employer 401(k) match: If it makes sense for your budget, be sure to contribute enough to your 401(k) plan to maximize the employer match and get the “free” money. Before leaving a job, ensure you're vested in the 401(k) plan so you can take those employer contributions with you. 

Live within (or below) your means: You should aim to manage your personal finances in a way that aligns with your income and available resources. Ideally, you’ll try to live below your means, so you have money left over at the end of each month to save or invest. One way to make progress on this goal is to cut out at least one unnecessary expense and funnel those savings into a retirement account. 

Redirect your raise: Raises offer an opportunity to boost the amount you are saving for retirement without reducing your take-home pay. The next time you get a pay increase, consider tucking a portion of it into a retirement account. 

Reallocate windfalls: If you receive a bonus, inheritance, or even a tax refund this year, you may consider putting a portion of the windfall aside towards your retirement.  

The bottom line 

A few small changes today could result in a much bigger retirement account balance down the line. The longer you give your money the chance to grow, the greater returns you may see in the future.