To include your employer’s 401(k) match in your savings rate, add it to both your savings and your income. The match is part of your pay that goes straight into an investment account, so it raises both sides of the fraction. Add it only to savings and you overstate your rate; leave it out entirely and you understate how fast you’re building wealth.
On a $100,000 salary with $10,000 of your own 401(k) contributions and a $5,000 match, your savings rate is $15,000 ÷ $105,000 = 14.3%, not $15,000 ÷ $100,000 = 15%.
Why the match goes on both sides of the fraction #
Savings rate = total savings ÷ total income
When your employer contributes, your compensation went up by the match and your savings went up by the same amount. Both numbers change. Leaving the denominator alone treats the match as savings you made out of income you never counted, which inflates the result.
The difference looks small in one year. Over a decade of planning, a rate that’s a point or two too high makes your projected retirement date look earlier than it is.
Savings rate formulas with a 401(k) match #
Gross method #
(your savings + employer match) ÷ (gross salary + employer match)
Net method #
(your savings + employer match) ÷ (gross salary − all taxes + employer match)
“All taxes” means federal, state and local income tax plus Social Security and Medicare. For FIRE timelines the net method is usually more useful, since it compares what you save with what you actually control. Our guide to gross vs net savings rate explains why.
Worked examples #
Example A: gross method #
Sarah earns $90,000. She puts 8% ($7,200) into her 401(k), and her employer matches dollar for dollar up to 4% of salary ($3,600). She also puts $6,500 into a Roth IRA and $4,000 into a high-yield savings account.
- Her own savings: $7,200 + $6,500 + $4,000 = $17,700
- With the match: $17,700 + $3,600 = $21,300
- Income with the match: $90,000 + $3,600 = $93,600
- Gross savings rate: $21,300 ÷ $93,600 = 22.8%
Without the match her rate would be $17,700 ÷ $90,000 = 19.7%.
Example B: net method #
David earns $120,000. He contributes 10% ($12,000) pre-tax, and his employer adds 5% ($6,000). He pays $32,000 in income and payroll taxes and invests $8,000 in a taxable brokerage account.
- His own savings: $12,000 + $8,000 = $20,000
- With the match: $26,000
- After-tax income: $120,000 − $32,000 = $88,000
- With the match: $94,000
- Net savings rate: $26,000 ÷ $94,000 = 27.7%
Notice the denominator is gross pay minus taxes, not David’s paycheck deposits. His $12,000 pre-tax contribution never reached his bank account, but it’s still part of his income and his savings.
Are you getting the whole match? #
The formula in your plan documents decides how much free money is on the table. A common one is “50% of the first 6% of salary.”
On an $80,000 salary under that formula:
| You contribute | Your dollars | Match | Match left unclaimed |
|---|---|---|---|
| 3% | $2,400 | $1,200 | $1,200 |
| 4% | $3,200 | $1,600 | $800 |
| 6% | $4,800 | $2,400 | $0 |
Going from 4% to 6% costs $1,600 and brings in $800 of match, an instant 50% return before any market gains. Two other things to check: whether your plan matches per paycheck (hitting the $24,500 limit early in the year can forfeit later matches unless the plan has a “true-up”), and whether a pay raise changes the dollars you need to contribute.
Retire Goals handles this for you. Its 401(k) goal models the match the way plans word it, such as 50% of the first 6% of salary, folds the match into the growth projection, and tells you when contributing a little more would collect the rest. You see your projected finish date with the match included, without doing the fraction by hand.
2026 401(k) limits that affect the match #
According to the IRS’s 2026 limits announcement:
- Employee contribution limit: $24,500
- Catch-up at age 50 and older: an extra $8,000
- Ages 60 to 63: a higher catch-up of $11,250 instead of $8,000, if the plan allows it
- IRA limit: $7,500, plus a $1,100 catch-up at 50 and older
Employer matching contributions don’t count against your $24,500 limit. They fall under a separate, much higher cap on total contributions to your account.
Two SECURE 2.0 changes are worth knowing. Plans may now let you receive matching contributions as Roth money. Those must be fully vested, and they’re included in your taxable income for the year they’re made, per IRS Notice 2024-2. And higher earners will have to make catch-up contributions as Roth; the IRS’s final regulations apply that rule starting in 2027, and plans can adopt it earlier.
How vesting changes what you should count #
Your own contributions are always 100% yours. Matching contributions can come with a vesting schedule. According to the IRS, a 401(k) can make you wait up to three years for full vesting under a cliff schedule, or phase it in over up to six years under a graded schedule.
How to handle that in your savings rate:
- You’re staying past the vesting date: count the full match.
- You might leave before vesting: count only the vested percentage, or leave the match out and treat it as a bonus if it sticks.
- You’re unsure: track your rate without the match monthly, and add vested amounts once a year.
Why the match matters so much for FIRE #
A match raises your savings without raising your spending, and that combination is what shortens a FIRE timeline. The same employer dollars also lower the share of your own paycheck you need to set aside. Our post on how your savings rate dictates your retirement date shows how a few points of savings rate move the finish line by years.
Frequently asked questions #
Should I count my employer match in my FIRE number? #
Your FIRE number is based on spending, so the match doesn’t change it. It changes how fast you get there. Once the match is vested, it’s part of the portfolio you’ll draw from.
Is a pre-tax match worth less than Roth savings? #
A dollar of pre-tax match is worth less than a dollar of Roth money because you’ll owe income tax when you withdraw it. Some savers discount pre-tax balances by their expected retirement tax rate when they total up their portfolio. For choosing between account types, see traditional vs Roth for FIRE.
Can I include my employer’s HSA contribution? #
Yes, handle it exactly like a 401(k) match: add it to both savings and income. HSA money that you invest and save for later medical costs works like another retirement account.
What if my employer deposits the match once a year? #
Some plans pay the match, or a true-up, as a lump sum after year-end, often only if you’re still employed on a set date. If so, leave it out of your monthly tracking and add it to your annual savings rate once it lands.
Does my employer match count toward the $24,500 limit? #
No. The $24,500 limit for 2026 applies only to your own contributions. Employer money counts toward a separate, higher overall limit, so a match never reduces how much you can put in yourself.