The Impact That A 1% Contribution Increase Makes
Published August 18, 2025

THE ONE MINUTE TAKEAWAY

Boosting your retirement contribution by just 1% may seem small, but it can make an enormous difference over time. For example, a 30-year-old earning $40,000 who increases their contribution by 1% could gain over $84,000 more by retirement, while only giving up about $8 a week. Even someone starting at 55 can add $17,000 to their savings. Many plans let you automate these increases or time them with raises, so they are barely noticeable. Bottom line: a minor change today can lead to a much stronger retirement tomorrow.

Why A 1% Increase Matters

No matter how close or far you are from retirement, increasing your contribution rate (even by just 1%) can have a big impact on your future savings. Yes, your paycheck might feel a little smaller now, but that small short-term sacrifice can lead to significant long-term growth in your retirement portfolio.

Breaking It Down: The Power of 1%

Let us look at two examples to see how powerful a 1% bump can be:

  • Case 1: A 30-year-old earning $40,000/year
    If she increases her contribution by just 1%, her paycheck goes down by about $8/week. But by the time she retires at age 67 with a 5.5% annual investment return and 4% salary growth, that small step could add up to an extra $84,344 in her retirement account.
  • Case 2: A 55-year-old earning $80,000/year
    If he increases his contribution by 1%, he gives up $16/week but could end up with an extra $16,779 at retirement, assuming the same investment and salary growth conditions.

What If You Increase by 1% Each Year?

If one small increase can make this much of a difference, imagine the impact of doing it year after year. If your financial situation allows, consider bumping up your contribution rate by 1% annually you’ll barely feel it now, but your future self will thank you.

Make It Automatic

Some retirement plans offer automatic contribution increases or let you schedule your own. This is a great way to boost your savings gradually, especially if you tend to forget or hesitate to change your contributions manually.

Use Raises to Boost Your Savings

Getting a raise? That’s the perfect time to up your contribution. When your salary increases, increasing your retirement savings means you’re putting more away without noticeably impacting your take-home pay. It’s a smart and painless way to grow your future wealth.

Small Steps = Big Results

It might not seem like much, but a 1% contribution increase can significantly impact your retirement savings over time. Whether you’re just starting your career or approaching retirement, every little bit counts. Review your contribution rate regularly, take advantage of salary increases, and explore automatic features your plan may offer. The path to a more secure retirement could be just 1% away.

It may also be beneficial to consult with a financial advisor to ensure your investment choices align with your personal financial goals.

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