Here Are 4 Easy Ways Americans Can Save $1,000 More This Year

Find out how contribution limits for 2019 can help you.

Whatever your financial goals are, saving up for retirement should always be a priority. Growing older necessitates smarter savings, as your ability to earn income might become more limited with age. An increase in retirement plan contribution limits for 2019, confirmed by the IRS back in November 2018, will help you save more. You might’ve been consistent about your contributions, but the raised limits might require some financial adjustment on your part.

Learn how to effortlessly reach the new contribution limits, and find out how this and other recent changes will help you better prepare for retirement.

IRA and 401k Limits for 2019

How much can you save for retirement this year? Technically, you can save as much as you want. Retirement savings need not come only in the form of designated plans. But if you’re already diligent about your contributions, adjustments to various plans, including the 401k contribution limit, will definitely be a boon.

2019 401k Limit: $19,000

First, employees who participate in 401k, 403b, most 457 plans — and for government employees and service members, the Thrift Savings Plan — will now have the opportunity to contribute up to $19,000 per year, up from $18,500.

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2019 IRA Limits: $6,000 and $7,000

For individual retirement accounts, individual contributions have also been increased by $500, for a total of $6,000 allowed for your 2019 contribution. And if you’re over 50, that IRA limit increases to $7,000.

In cases where taxpayers are eligible to deduct contributions to a traditional IRA, the deduction might be able to be reduced or phased out. The phase-out ranges for deducting those contributions to traditional IRAs also increased from 2018 for most tax filers:

  • Single filers covered by a workplace retirement plan: $64,000 to $74,000, up from $63,000 to $73,000.
  • Married couples filing jointly, when the spouse making the IRA contribution is covered by a workplace retirement plan: $103,000 to $123,000, up from $101,000 to $121,000.
  • IRA contributor not covered by a workplace retirement plan but married to someone who is: $193,000 to $203,000, up from $189,000 to $199,000.

Catch-up contribution limits have remained the same.

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4 Easy Ways Workers Can Save $1,000 More This Year

There are many ways you can fold in the extra $1,000 in IRA and 401k contributions to your savings strategy. Try these strategies to take advantage of the new retirement savings limits and max out your IRA in 2019:

Save $4 a Day for 250 Days

You can begin adding to your contribution by saving less than $5 a day for more than half the year. The 250 days will give you some wiggle room to splurge every now and then, but experiment with shaving $4 off your usual expenses. Maybe that means sticking with water instead of an iced tea when eating out, or favoring a brisk walk in lieu of public transportation.

Adjust Your Direct Deposits

If you receive direct deposits, you can divert some of those funds into your savings account. Tweak the numbers a bit to find out how much you can reasonably save until you hit the $1,000 mark. Passive saving can be ideal because you’re not constantly thinking about the money figures, but if you don’t receive direct deposit, the same strategy still applies: Adjust the numbers on your paycheck so you wind up with $1,000 in your retirement account.

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Pick Up a Side Gig

Picking up additional work can be a pain, but when the end goal is $1,000, you could make that within a couple months with just a temporary side job. Rideshare platforms such as Lyft and Uber are good choices for people living in bustling urban centers, whereas people living in more austere communities might find remote freelancing to be the most suitable option.

Itemize Expenses and Adjust Your Spending

This sounds like a no-brainer, but making a physical list of your expenses can work wonders for your spending habits. Besides confronting your purchases, you’ll also be able to glean the wants from the needs, which could result in you saving money in the long run.

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The Value of Saving for Retirement

A December 2018 GOBankingRates survey found that Americans have no idea how much to save for retirement. Almost 40 percent of survey respondents said they would ideally like to save between $100,000 to $250,000 for retirement. Given that a nest egg of $1 million to $1.5 million is generally recommended as how much you should save for retirement, the whole process can seem daunting.

That’s why the higher caps on contribution limits matter so much. The 401k limit increase of $500 annually, for example, might not seem like a huge advantage, but that amount adds up over time.

For example, using a traditional IRA, if you’re 30 and you begin saving $6,000 annually today, with a starting balance of $0, you’d have more than $668,000 saved up in your IRA by the time you are 65, if you assume an investment return of 6 percent and an inflation rate of 3 percent.

When it comes to saving for retirement, it’s important to ask yourself what you want out of retirement. Where do you want to end up, and will your savings allow for that? It’s a good idea to start building up your nest egg early, especially if you haven’t already started, but different retirement goals call for different saving strategies.

Click through to find out what a comfortable retirement will cost across the U.S.

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