You Can Now Save More for Retirement

Libby Kane
Posted

Have you heard?

The limit on retirement savings contributions for both 401(k)s and IRAs in 2013 has increased by $500. That means you can tuck even more money away now to make retirement awesome later. Specifically:

  • The contribution limit on employer-sponsored plans (401(k), 403(b) and most 457 plans) has increased from $17,000 to $17,500
  • The contribution limit on IRAs has increased from $5,000 to $5,500
  • The “catch-up” contribution for people ages 50 and older remains $1,000 for IRAs and $5,500 for 401(k)s

The one big question mark regarding our finances in 2013 is what our taxes will look like. The government faces a deadline at the end of the year to determine whether to extend certain tax cuts or let them expire, and to set tax brackets.

Daily Finance has even more details, but let’s take a minute to recite one of our go-to mantras: “We will do our best to max out our 401(k)s and IRAs and take full advantage of company match.” (Now five times fast!)

Really, though, the adjustment in retirement contribution limits was instituted to help our accounts keep up with inflation.

Make sure you adjust your budget accordingly–by the way, you can now do that with our shiny new, free iPhone app.

Update, November 2, 2012: This article originally misstated the age at which people can make catch-up contributions. It’s 50 and older.