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.
After all, we’ve never heard of a retiree complaining, “gosh, I saved too much money!”
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.
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.
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.
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!
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.