How you can increase your 401(k) savings

It’s been a challenging few months for anyone contributing to a 401(k). Your account balance has probably decreased as the value of both stocks and bonds has decreased. Younger investors should not overreact. Even if you haven’t seen one before, extended down markets are unavoidable. The good news is that they allow you to purchase more shares at a discount.

But regardless of your age, now is an excellent moment to reassess your 401(k) strategy if you’re experiencing anxiety. This is crucial if your contribution amount has not changed since you enrolled in the plan or were enrolled automatically.

This article outlines the steps you can take to increase your 401(k) savings.

How Much Can You Contribute to 401(k) in the Coming Year?

The Treasury Department is required by law to raise 401(k) contribution caps as the cost of living rises. This is consistent with the IRS‘ most current inflation-adjusted tax rule.

The current 401(k) contribution limit is $20,500 (an increase of $1,000 from 2021). You will be permitted to make a $22,500 contribution to the 401(k) plan starting in 2023. You can also make an additional $7,500 contribution if you are over age 50, for a total donation of up to $30,000.

What Happens if I Have a Different Kind of Retirement Plan?

Other retirement plan types, such as 403(b)s, the majority of 457 plans, and federal Thrift Savings Plans, are subject to the new $22,500 contribution cap.

Also increasing is the IRA. In 2023, the IRS will increase the annual contribution ceiling for traditional and Roth IRAs to $6,500. That is an increase of $500 from this year.

Since pensions are getting harder to get, most people must rely on retirement savings (as well as Social Security). Therefore, these inflation adjustments are essential, regardless of your retirement goals.

Steps to Increase Your 401(k) Plan

1. Refuse to accept the standard savings rate

It’s becoming more common for new hires to automatically open a retirement account at work, most frequently by having 3% of their pay put into their employer’s 401(k) plan. But while saving 3% of your income is better than nothing, it might not be enough to support your present standard of living in retirement.

When you earn a raise, save 1% extra each year until you’ve hopefully saved up to 20% of your pay.

2. Get a 401(k) match

The typical 401(k) match is about 50 cents for every dollar saved, up to 6% of gross income. Make sure you save enough money to leverage your employer’s 401(k) match, if available.

3. Continue until you have vested

You won’t be able to keep your employer’s 401(k) match until you have fully vested in the 401(k), which may take up to five or six years of employment with the company.

Depending on their years of service, some employers permit workers who leave before they are fully vested to keep a portion of the match, while others demand that they forfeit the entire match. Working for a company until you reach your full 401(k) vesting benefit might occasionally be worth thousands of dollars.

Contact Information:
Email: [email protected]
Phone: 8007794183

Bio:
For over 20 years, Jeff Boettcher has helped his clients grow and protect their retirement savings. “each time I work with my clients, I’m building their future, and there are few things that are more important to a family than a stable financial foundation.”

Jeff is known for his ability to make the complex simple while helping navigate his clients through the challenges of making the right investment decisions. When asked what he is most passionate about professionally, his answer was true to character, “Helping my clients – I love being able to solve their problems. People are rightfully concerned about their retirement income, when they can retire, how to maximize their financial safety and future income.” Jeff started Bedrock Investment Advisors for clients who value a close working relationship with their advisors.

A Michigan native, Jeff grew up playing sports throughout high school and into college. While Jeff is still an ‘aging’ athlete, Jeff will take more swings on the golf course than miles running these days. He creates family time, often with weekly excursions to play golf, a hobby he shares with his three young children.

Disclosure:
Investment Advisory Services are offered through BWM Advisory, LLC (BWM). BWM is registered as an investment advisor and only conducts business in states where it is properly registered or is excluded from registration requirements. We are currently either state or SEC-registered in the following states: Arizona, Florida, Illinois, Kansas, Louisiana, Michigan, New York, Oregon, Texas, and Washington. Registration is not an endorsement of the firm by securities regulators and does not mean the advisor has achieved a specific level of skill or ability. The firm is not engaged in the practice of law or accounting. Always consult an attorney or tax professional regarding your specific legal or tax situation.
Although we make great efforts to ensure the accuracy of the information contained herein, we cannot guarantee all information is correct. Different types of investments involve higher and lower levels of risk. There is no guarantee that a specific investment or strategy will be suitable or profitable for an investor’s portfolio. There are no assurances that a portfolio will match or exceed any particular benchmark. Any comments regarding guarantees, safe and secure investments, guaranteed income streams, or similar refer only to fixed insurance and annuity products. They do not refer, in any way, to securities or investment advisory products. Fixed insurance and annuity product guarantees are subject to the claimsâ€paying ability of the issuing company and are not offered by BWM Advisory, LLC. Guaranteed lifetime income is available through annuitization or the purchase of an optional lifetime income rider, a benefit for which an annual premium is charged. Annuities are long-term products of the insurance industry designed for retirement income. They contain some limitations, including possible withdrawal charges and a market value adjustment that could affect contract values. Annuities are not FDIC-insured. Not affiliated with the U.S. Federal Government or any government Agency.