The contribution limits for 401(k) plans increases for tax year 2023. For those looking to max out their plans, the most you can contribute will be $22,500—an increase of $2,000. For workers over the age of 50, the catch-up contribution increased additional $1,000 to $7,500 per year. Now is great time to power up your savings plan and reap these benefits:
1. Get the Full Company Match
If you aren’t contributing enough to get the full company match, you are missing out. A company match is a benefit offered by some employers where they will match a certain percentage of the contributions that their employees make to their retirement savings plan, such as a 401k. With a company match, you can save more money for retirement without using additional money out of your own pocket. This can help you save more money towards your retirement goal.
2. Tax Savings
Contributions to your 401(k) are made on a pre-tax basis, meaning you don’t pay income taxes this year on money you contribute. This can help lower your overall tax bill. The money you contribute to a 401k will grow tax deferred and not taxed until you withdraw it in retirement. This means that your savings can grow tax-free until you need it, potentially leading to a larger nest egg.
3. Financial Confidence
Increasing your retirement savings may ensure that you have enough money to support yourself during your golden years. When you have more saved for retirement, you have more control over how and when you use your savings. This can give you the freedom to make choices about your retirement lifestyle, such as where you want to live and how you want to spend your time. Knowing that you have saved enough for retirement can provide financial confidence and help you enjoy your retirement without worrying about financial insecurity.
Wherever you are today, and whatever age, look for ways to increase the amount you are saving for retirement. Having a plan can help tremendously, and changes can be made more easily. If you’re starting from scratch, new to investing, or want a second look at your plan, give our office a call today.
Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Independent Advisor Alliance, a registered investment advisor. Independent Advisor Alliance and Marzano Capital Group are separate entities from LPL Financial.