Retirement savers got a little boost from the IRS with the 2015 increase to company retirement plan contributions. Based on cost of living increases, you can now put a maximum $18,000 into elective deferral plans such as 401(k)s, 403(b)s, and 457 plans. If you’re over 50, your catch-up amount can increase from $5,500 to $6,000 making total funds able to be set aside at $24,000.
Check with your Employer
Don’t assume that if you have been maxing out your contributions, that your deferral will automatically be increased. Make sure to look into your elections or check with HR so that you can capitalize on the new higher limits.
Not maxing out your retirement contribution yet?
That gives you an even bigger incentive to review your current deferral rates. First, make sure you’re not missing out on a company match. Next, try to plan for regular increases to your contributions over time so that you can work to increase your overall retirement savings. Give yourself a reminder to review your deferrals either at the beginning of a new year or around the time that your company offers raises.
Proactive management of your savings for retirement and paying yourself first are cornerstones to successful preparation for your future. If you want to understand what your future may look like based upon your current retirement savings or with some of the options you’re considering with a “raise”, let your financial planner know. Running those numbers is part of what we do!
Melissa Joy, CFP®is Partner and Director of Investments at Center for Financial Planning, Inc. In 2013, Melissa was honored by Financial Advisor magazine in the Research All Star List for the third consecutive year. In addition to her contributions to Money Centered blogs, she writes investment updates at The Center and is regularly quoted in national media publications including The Chicago Tribune, Investment News, and Morningstar Advisor.
Financial Advisor magazine's inaugural Research All Star List is based on job function of the person evaluated, fund selections and evaluation process used, study of rejected fund examples, and evaluation of challenges faced in the job and actions taken to overcome those challenges. Evaluations are independently conducted by Financial Advisor Magazine.
Any opinions are those of Center for Financial Planning, Inc. and not necessarily those of RJFS or Raymond James. C15-000604