If you can afford that contribution, your 401(k) can still handle the job. You’d be well within the IRS’s maximum annual contribution cap. In 2021, for example, everyone under age 50 can contribute up to $19,500 to a 401(k), or $58,000 including employer contributions.

## When your 401(k) just isn’t enough

Your 401(k) may fall short if you’ve already celebrated your 50th birthday without much savings to show for it. The challenge you’ll face is that annual contribution cap. After your 50th birthday, you can make catch-up contributions, which will help. In 2021, the catch-up contributions are $6,500. That increases your contribution limit to $26,000 annually.

While $26,000 sounds like a lot to save in a year, it’s often not enough for older savers. You have two factors working against you after 50. One, the investment timeline is very short, which limits your earnings potential. And two, as you near retirement, you need to start insulating your wealth from normal market volatility.

Let’s say you earn an average salary of $60,000 at age 50, and your employer matches 5%, or $3,000. With your maximum contribution of $26,000, you are saving $29,000 annually in total or about $2,400 monthly. That monthly contribution would grow to about $676,000 after 15 years — if you can keep that 6% growth rate.