Retirement planning advice abounds, and you’ve probably heard or read a variety of theories on this subject. But one rule definitely stands out as solid, practical advice that applies equally to everyone: Save as much as you can.\r
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After all, we’ve never heard of a retiree complaining, “gosh, I saved too much money!”\r
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Not only is saving a powerful step toward planning for a secure future; stashing funds in your 401(k) earns you a valuable tax break each year. Because all contributions up to the annual limit are tax-free, you essentially lower your taxable income for the year. You’re saving for your future, but also saving money right now.\r
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That’s why we were pleased to hear the news that 401(k) contribution limits will increase in 2019. In 2018, you were able to max out your contribution at $18,500. In 2019, that limit will increase to $19,000. This threshold also applies to 403(b) and Governmental Section 457 plans.\r
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For those age 50 and older, you can make an additional “catch-up” contribution to your qualified retirement account each year, in the amount of $6,000. This limit hasn’t changed for 2019, but catch-up contributions still serve as a valuable tool in your last decade or so before retirement. Make sure you’re taking full advantage of this opportunity.\r
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One last note about increasing limits for 2019: The Social Security taxable wage base will jump from $128,700 to $132,300 next year. Yes, that means a bit more of your income could be subject to Social Security taxes. All the more reason to take advantage of those tax savings from your qualified retirement plan!\r
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For more information on contribution limits, or if you have questions about your 401(k) in general, give us a call. If you own a business, we can even help you set up a 401(k) plan for your employees.