As an investment advisor who has worked with the retirement plans of Apple, IBM and AT&T, I often receive questions from participants about how much they should contribute. I typically respond by saying, "At least 20%."

They usually laugh and say, "No, really."

And I repeat, "Really, at least 20%."

Many retirement experts suggest that most of us need to add 12% to 15% of our compensation to our 401(k) plan accounts every year we work. The average 401(k) participant adds 10.9% to 12.9% to a 401(k) account each year (employee contributions plus employer contributions), according to Money magazine. That seems to be right on track. However, if we look at the way most of us normally contribute, that range is way too low.

In real life, most of us don't contribute in a uniform way to our 401(k) plans. Early in our careers, when we are just getting started, most of us battle with competing saving and spending priorities. We are trying to pay off student loans, buy a car or save for a down payment on a home. Or, surprise, we may end up having kids!

As a result, during that first 10 years of our 40-year careers, most of us contribute very little (or nothing) to our 401(k) plans. At that time in our lives, retirement seems pretty far off anyway and those student loans look pretty scary. We often change jobs frequently as we try to figure out what we want to do with our lives and, unfortunately, many of us end up taking distributions of our 401(k) balances rather than rolling them over.

Generally, most of us are in our 30s when we begin to consider saving more seriously for our retirement. We now own homes, are a little more established in our careers and are earning more. Typically, we contribute the amount that will allow us to collect the maximum company matching contribution. The most common employer matching contribution is 50% of the first 6% of employee contributions. So we end up adding 9% on average to our 401(k) accounts during our 30s.

During the last 20 years of our careers, we begin to panic as we realize that we haven't been contributing enough. Retirement is no longer a distant thought but is moving closer to reality. For these years, we may contribute as much as we possibly can. If we look at our contribution history and apply a little math, many of us end up with the following:

· Early career contributions (first 10 years): 0%
· Mid-career contributions (second 10 years): 9%
· Mid-career contributions (third 10 years): 15%
· Late career contributions (final 10 years): 18%

· Average contribution rate over 40 years: 10.50%
· Required minimum average contribution rate: 12.00%

I can hear what you are thinking” "Not much of a difference Bob. What's the point?" There are two problems with how we contribute. First, the problem that can't be fixed.

Back-loading rather than front-loading

All of us understand the power of compounding. That's when your savings magically increase over time because of interest on interest. Well, that is not what we are experiencing in our typical contribution patterns, as outlined above. We are back-loading contributions into our accounts rather than front-loading, contributing a lot at the end of our careers and very little at the beginning. As a result, we are missing out on all of that compounding that takes place over time. We end up with a 401(k) account balance that is way too low.

But I am going to catch up!

Most of us know we didn't contribute enough early in our careers. We rationalize that we can fix things by contributing as much as possible during our later years to make up the difference. So during that last 10 years of our careers, what would we need to add to our 401(k) accounts each year in the example above to average 12% for our entire 40-year career? More than you might think — 24% per year. Given that the average employer matching contribution is 3%, that means that our contribution rate for the last 10 years of our careers would need to be 21%.

As someone who has worked with 401(k) plans for more than 30 years, I can tell you that none of us are close to making 21% in contributions each year.

Regardless of what stage of your career you are in, all of us likely need to contribute more. Take a look at your 401(k) contribution rate today. It should be 20%.

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