Experts advise against maxing out 401(k) contributions for 2024 if certain conditions are met.

• In 2024, employees can defer up to $23,000 into 401(k) plans, an increase of $5,000 from the 2023 limit of $22,500, with an additional $7,500 for workers aged 50 and above.
• Before maxing out your 401(k), consider high-interest debt, emergency savings, and short-term goals after obtaining your employer match.

Financial advisors suggest that there is still time to increase 401(k) contributions and reach the maximum account balance for 2024, but it may not be suitable for everyone.

In 2024, employees can contribute up to $23,000 into their 401(k) plans, an increase of $500 from the previous year's limit of $22,500. Additionally, workers aged 50 and above can contribute an extra $7,500. Some 401(k) plans offer the option to save beyond these limits.

It's crucial to save enough to receive your employer's full matching contribution, which adds extra funds based on your contributions, advised certified financial planner Donald LaGrange, a wealth advisor with Murphy & Sylvest Wealth Management in Dallas.

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Before adding more to your 401(k) plan after receiving your employer's full match, consider several variables, LaGrange advised.

In 2023, a report from Vanguard revealed that 14% of investors fully utilized their 401(k) employee deferrals.

In 2023, the estimated average 401(k) savings rate, including employee deferrals and company contributions, was 11.7%, which matched a record high from the previous year, according to a Vanguard report.

1. Prioritize high-interest debt

If they must choose between paying off debt or saving, prioritizing debt repayment is crucial with today's higher interest rates, he said.

In early August, the average credit card interest rate was close to 25%, as reported by LendingTree. However, this rate could decrease once the Federal Reserve begins reducing rates, which may occur in September.

To increase 401(k) contributions in the future, Van Den Berg advised paying off the debt first to release cash flow.

2. Plan for short-term goals

"According to LaGrange from Murphy & Sylvest Wealth Management, a 401(k) may not be the most suitable account for pre-retirement savings. Instead, families should prioritize their savings goals and timelines."

3. Weigh your emergency fund

Experts suggest that entrepreneurs and small business owners should aim for more than six months of emergency savings, while most experts recommend keeping at least three to six months of expenses in cash or liquid assets.

Over 59% of Americans are not satisfied with their emergency savings, which is an increase from 48% in 2021, as per an annual Bankrate survey conducted among more than 1,000 U.S. adults in May.