The new year is always a time for reflection on various long-term strategies to help us reach our goals in life.
Whether it be fitness goals or career goals, the new year seems to be the time when we all collectively take inventory of where we can improve.
Retirement planning is no different, and the beginning of the year is a great time to take stock of where you stand in relation to your contributions and goals for retirement.
Below, we’ll look at the key ways to maximize your 401k in 2023 by taking advantage of new limits.
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Look At Your Current 401k Contributions
It’s very common for people to set their 401k contributions once when they first start a new job and then almost never look into it again. Of course, this isn’t the best strategy when it comes to maximizing your 401K to get the best results.
Look into your 401k contributions and see if they still match your current financial situation. Are you earning more money now and can afford a larger contribution?
Also, look into your company’s matching policy. Are you taking full advantage of any matching offered? If not, this is a great time to adjust your contributions.
Take Advantage Of Increased 401k Limits In 2023
2023 introduces new, higher limits for 401k contributions that can really help those looking to catch up or accelerate their savings.
The limits have been increased from $20,500 last year to $22,500 this year. These limits apply to all age groups.
However, if you’re over 50, you can take advantage of newly increased “catch-up” limits which were increased from $6,500 to $7,500.
Start Your Contributions As Early As Possible
If you decide to increase your contributions, start doing it as early as possible. The sooner your money is in the market, the longer it has to grow.
This can also be easier for most people’s finances as spreading out the contributions is much easier than waiting until later in the year.
Ask About Your Company’s Matching Funds
Not all matching funds work the same for every employer. Some only match when contributions are made directly from your paycheck. Other programs may have similar restrictions.
Make sure to learn about your specific 401k plan and policies to make sure you are taking full advantage of what’s offered and not missing out on valuable matching funds.
Those with higher earnings may want to also look into front-loading your contributions. This is a strategy that can allow for home take-home salary later in the year.
ICCNV is an innovative advisory firm that can help provide guidance with your 401k. Their experienced wealth management experts know how to maximize your entire retirement plan so you can achieve your goals in 2023 and beyond.