January 2, 2019
You can save more money for retirement next year. Limits on the annual contribution to your retirement account went up for 2019.
The maximum contribution for 401(k)s accounts goes from $18,500 to $19,000 in 2019. If you're 50 or over, you still get an additional $6,000 catch-up contribution on top of that.
For IRAs, the annual contribution limit goes from $5,500 to $6,000. If you're age 50 or up, you get an additional $1,000 on top of that for your catch-up contribution.
While $500 extra may not sound like a big deal, it is. Contribute that extra $500 every year for 30 years – and earn an average annual return of 7 percent – and you'll have an extra $47,000 for retirement.
“If you have a 401(k) or other employer-sponsored retirement plan, resolve to increase your contributions in 2019,” said Greg McBride, chief financial analyst at Bankrate.com. "If you're not contributing enough, here's your chance to increase that. You want to be maximizing your employer match at the very least – that's free money. But realistically, most of us need to be saving 10 or even 15 percent of our income in order to have an adequate retirement. You can do that through your workplace 401(k).
If you don't have a workplace plan, but you have earned income or a spouse who has earned income, you're eligible for an IRA, McBride noted. You can set that up for your bank brokerage or mutual fund company.