T. Rowe Price, the mutual fund giant, recently completed a study which showed that participants should average 15% in contributions into their 401(k) plan accounts each year to achieve retirement readiness. Approximately three years ago, Alliance Bernstein conducted a similar study which came to basically the same conclusion.
The 15% contribution rate includes employer contributions and should be maintained for the length of a participants 40 year career. Since many employers provide matching contributions (typically at a 3% rate) a 12% participant contribution rate may seem pretty reasonable.
