Super savers will be able to save a little more money for retirement in 2020.
The IRS raised the contribution limits for employees who participate in 401(k), 403(b) and most 457 plans from $19,000 to $19,500.
People aged 50 an older will be able to make $6,500 in additional catch-up contributions, up from $6,000.
“The raised contribution limits help savers allocate more money toward retirement savings without tax consequences,” says Andrew Meadows, senior vice president at Ubiquity Retirement + Savings. “This allows them to save on taxes and increase their balances faster while overall helping compound interest grow their nest egg.”
The contribution on IRAs, however, was unchanged at $6,000. The limit on catch-up contributions was also unchanged at $1,000.
Limits on contributions to SIMPLE retirement accounts increased to $13,500 from $13,000.
How to boost your retirement savings
If you can’t contribute up to the max and are looking for ways to boost your retirement savings, Meadows says to take advantage of the tools offered by your 401(k) provider.
“Most 401(k) providers offer tools for folks to make these kinds of plans based on compensation, age and desired savings rate,” he says. “As a saver, you have control over how much you contribute. If you’re not able to save more in your current situation, take a look at opportunities to increase your compensation through promotions, merit increases, job changes or adjustments to your spending.”
Meadows adds: “Every time you receive an income increase, don’t forget to adjust your savings strategy accordingly, especially if you’re wanting to save even more.”