- The IRS raised the limits individuals can contribute to 401(k) plans and IRAs this year to $19,000 and $6,000, respectively, for those under 50. If you're over that age, you can sock away even more money.
- Even if you're not close to those limits, now is the time to check on your savings progress for this year and take steps to ramp up your contributions.
As the calendar crosses the mid-year mark, are you on track to reach your retirement savings goals?
The IRS has raised the limits for what you can put away in pre-tax retirement savings account this year.
That means you can sock away as much as $19,000 in your 401(k), 403(b), Thrift Savings Plan and most 457 plans, up from $18,500 in 2018.
You can also save as much as $6,000 in an IRA, up from $5,500 in 2018.
If you're age 50 and over, you can put in an additional $6,000 in your 401(k) and other employee plans and another $1,000 in your IRA.
Even if your personal savings will be nowhere near those limits, now is a great time to check on whether your savings rates will get you to your goals for this year and beyond.
If you're behind, these two tips will help you maximize your savings.
Ideally, you should be saving as much as 10% to 15% of your salary annually toward retirement.
If you are saving 6% now, getting to 15% may sound daunting.
One way to gradually get there: Strive to increase your savings rate by at least 1% each year. You may not notice the difference this year. That change could add up big over time.
"Those small jumps by just 1% or 2% over a 20-year or 30-year career can really make a big difference in the end," said Meghan Murphy, vice president at Fidelity Investments. "The longer that money is in the plan and has time to grow, the better off you are."
When extra money comes in, make your retirement savings a priority.
"Aligning an increase in your savings to your 401(k) with a raise always makes the increase less painful," Murphy said.
One-time annual bonuses are also a great opportunity to add to your retirement funds, said Ted Jenkin, CEO of Oxygen Financial.
"A lot of people get that annual bonus and they have it already spent on a truck or a new bathroom remodel or a vacation in the Caribbean, but that doesn't help you retire," Jenkin said.