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Here’s How Much You Can Contribute to 401(k)s and IRAs in 2019

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If you’re all about saving for retirement and putting away as much as you can, we’ve got some good news.

Starting in 2019, you can contribute $500 more to your 401(k) and individual retirement account (IRA) than you were allowed to in 2018.

New 401(k) and IRA Contribution Limits

In 2019, the U.S. government will raise the personal 401(k) contribution max from $18,500 to $19,000 annually. The annual contribution max for IRA accounts will also increase, from $5,500 to $6,000. That’s an extra $1,000 that you can tuck away and have working for you and your future.

The 401(k) maximum does not include employer contributions, so your freebie dough is off the hook.

The increase means your total contribution allowance is $25,000 for 2019.

Sweet, right?

OK, we’ll be real. Not many of us are putting away that much money. If you get paid every two weeks like most of us, you’re looking at more than $1,000 taken out of each paycheck to reach that lofty $25,000 by year’s end.

Another way to look at it is that if you make $125,000 annually, you can now stash a full 20% of your paycheck. What would that add up to, you ask?

If you were to start with no money and saved this much each year for 35 years, you’d have $665,000 before interest in your 401(k) and $193,000 before interest in your Roth IRA. Factor in a modest 6% return on investment, and the combined number jumps to just under $3 million. That’s a nice little chunk of change for your golden years.

The trick is to not dip into your retirement savings before you retire.

But let’s face it: Most of us don’t earn $125,000 a year and don’t put 20% of our salaries in our retirement accounts.

For now, contribute as much as you can to your 401(k) without putting your financial health at risk. A good starting point is to see how much your employer matches and try to at least hit that number. Here’s a simple 401(k) guide to get you jump started.

Consider opening a traditional or Roth IRA account if you don’t have one already.

Who knows? Perhaps you’ll reach that $25,000 annual contribution ceiling eventually. #lifegoals

Tyler Omoth is a senior writer at The Penny Hoarder who loves soaking up the sun and finding creative ways to help others. Catch him on Twitter at @Tyomoth.

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