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Table: Why the Max May Be Too Much

For many families, saving the highest possible percentage of pay in a 401(k) account could depress lifetime spending. Here's why:

-- By raising your retirement income, you increase the share of your Social Security benefits subject to income taxes.

-- You will have to pay regular income tax rates--not the lower capital-gains rate--on all 401(k) withdrawals. Plus, the income could push you into a higher tax bracket.

-- If 401(k) contributions put you in a lower tax bracket now, you will get smaller tax benefits from your mortgage-interest deduction.

-- If you put too much into your 401(k), you may not have enough money available for emergencies.

-- Some people save too much. It doesn't make sense to make yourself rich in old age by making yourself poor in youth.

Data: Economic Security Planning Inc., BusinessWeek

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