Saving for retirement is a big financial goal. If you are just getting started or looking for ways to increase your nest egg, you can now put more into your retirement savings.
The IRS raised contribution limits for 401(k), 403(b), most 457 plans and the federal Thrift Savings Plan from $18,500 to $19,000 a year. If you have an IRA account, you can save up to $6,000, up from $5,500 last year — and if you have a SEP IRA (retirement savings account used mostly by small business owners and self-employed workers) you can contribute $56,000 in 2019, up $1,000 from last year.
What does this mean?
That $500 difference may not seem like a lot. But most Americans won't come close to hitting their limit. A worker making the median income of $31,099 would have to contribute a more than half of their income to max out their contributions.
It's not just that Americans aren't maxing out their contributions. They aren't contributing enough in general to be comfortable for retirement: A survey by the Employee Benefit Research Institute revealed one in three workers don't feel confident about retiring comfortably.
How to jump-start your retirement savings
Saving for retirement may seem difficult. But a little bit of money can go a long way, thanks to compound interest. The best rule of thumb is to invest as soon as possible, with as much as you can, to maximize return.
Even if you don't have an extra $19,000 to put into your 401(k) next year, you can take small steps to increase your contributions.
Most employers let you adjust your contribution amount any time. If your employer matches your contribution, try to meet their match. Most companies match contributions between 3% to 6% of your paycheck. If you're unable to meet the match, increasing your contributions by just 1% can make a huge difference in the long run.
If you are nearing retirement, workers 50 and over can contribute $6,000 in annual catch-up contributions on top of the $19,000 a year.
Not sure where to start? Here are five ways you can save for retirement (in five minutes or less).
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