Planning for retirement is looking up in 2019 because the limits for IRAs and 401(k) accounts are rising. This is the first time we’ve seen an increase in six years. If you really want to make the most of your investment savings, consider making an extra contribution. These tips can help!
2019 IRA Limit Increases
There is a $500 change in retirement program contributions this year. That goes for Roth, SIMPLE, and Traditional IRAs, as well as any 401(k), 403(b), and 457 plans. Roth IRA and Traditional IRA programs are going up to $6,000 from $5,500. SIMPLE IRAs are bumping up to $13,000 from $12,500. The 401(k) plans rise to $19,000 from $18,500.
Being able to contribute the full allowable amount has always been a good practice, but now the return can be even better. The new maximum contributions can help individuals make the most of their tax savings—not to mention their compound interest. With that additional money in their funds, the earnings potential should see a nice little boost.
Tips for Your Contributions
If you want to contribute more to your retirement accounts in 2019, then you’ll need to figure out where the money will be coming from. Taking advantage of these increased limits might require some planning. Some people choose to direct a raise or bonus at work right into their retirement account. That way, you don’t have to modify your existing lifestyle to invest in the future. Employers that match your plan contributions make this an even smarter setup. Then your money can go twice as far.
Another option for staying on top of your retirement savings plan is to schedule automatic contributions. Those with individual plans often benefit from having funds automatically pulled from their bank accounts on a regular basis. That way, they won’t forget to make their transfers, so they’ll be able to contribute the maximum allowable amount, or as much as they’d like, throughout the year. Certain employer plans also offer auto-escalation features. This can be useful if you want to slowly increase your contributions, rather than make big transfers in a single transaction.
Diverting your pay raise and making arrangements for automatic contributions can help you stay on track for retirement, but sometimes, more creative solutions can be helpful. Figuring out how to reduce your spending in a comfortable way is a fantastic way to meet those limits before the year is up.
Ready for a Better Budget?
When you want to review your expenses, it’s usually okay to start small. For example, you might have a monthly subscription that can be canceled, or you might be willing to cut back on your visits to the coffee shop. If your cable or internet bill seems high, why not try negotiating for a lower rate? You can also make plans to cook at home more often if you’re prone to eating out. Then you can put your savings toward funding your retirement accounts.
Of course, designing a budget isn’t easy. It can help to have a professional eye run the numbers with you to see what’s realistic for your lifestyle. If you’re interested in making a plan, know that our team at NSO and Company is here for you! We’re always happy to meet with clients for a solid budgeting strategy. During that time, we can also answer any questions you might have about tax strategies regarding your retirement savings. The more you know, the better off you’ll be—both now, and down the road!
