(ThyBlackMan.com) In 2018, the Federal Government increased maximum allowable contributions to retirement plans, such as 401-K, IRA, ROTH IRA, SEP, etc. plans.
Why is Congress being generous and increasing retirement contributions?
A. Congress really cares about our welfare. They want to help taxpayers.
B. This is an automatic inflationary increase. Congress makes inflationary increases to contribution limits biannually.
C. Congress is worried and panicking majority of Americans cannot afford to retire and will further burden our social services almost BROKE budget. My answer is C.
Do not worry, if you selected A as your answer. As a consolation prize I have a very special deal for you. {My brother and I own four acres of prime NY real estate located in Wallace, North Carolina (your 1st hint). We are THRILLED to sell this valuable parcel for an
unbelievable $2.5 million. This is PRIME NY real estate. (2nd hint)
Ok back to business. The Federal Government is worried the average American will be flat broke in retirement unless they continue working for infinity! The vast majority of Americans have under $1,000 saved and half of all Americans have nothing at all put away for retirement.
SECOND DILIMA – DISAPPEARING PENSIONS
Only 33% of Americans have a pension plan today. Decades ago ~88% of private sector workers had a pension. Without pensions, older workers are forced to stay in the workforce longer. Take a look at jobs you are use to seeing only teenagers and you may see a large number of more mature employees.
When you add the average social security payment of $1,412 and our own limited retirement savings, majority of Americans simply cannot afford to retire. This is the problem the government is beginning (slowly) to recognize.
401-K 2019 INCREASE IN CONTRIBUTIONS
The maximum contribution for your 401(k) or similar workplace retirement plan increases from $18,500 in 2018 to $19,000 in 2019. For those 50 and older, catch-up contribution limits in 2019 remain unchanged at $6,000 for workplace plans, bringing total allowable contributions for 2019 for those 50 and older to $25,000.
IRA AND ROTH IRA 2019 INCREASE IN CONTRIBUTIONS
In 2019, you will be able to save up to $6,000 in your IRA, up from $5,500 in 2018. For those 50 and older, catch-up contribution limits in 2019 remain unchanged at $1,000, bringing total allowable contributions for 2019 for those 50 and older to $7,000.
2019 SIMPLIFIED EMPLOYEE PENSION (SEP) LIMITS
In 2019, self-employed workers can contribute a maximum of $56,000 or 25% of NET self-employment income, compared to $55,000 in 2018.
CONCLUSION
Majority of us need to significantly increase our retirement savings by increasing our contributions to retirement plans.
Please increase your 2019 contributions by as much as you can.
Strive for 10% or more.
2019 SUMMARY RETIREMENT PLANS CONTRIBUTION LIMITS
- 401-K; 403(b), most 457 plans, and the federal government’s Thrift Savings Plan: 2019 Limits: $19,000; Catch-up contribution limit for employees aged 50 and over remains $6,000
- IRA and ROTH IRA: 2019 Limits: $6,000; Catch-up contribution limit for employees aged 50 and over remains $1,000
- SIMPLIFIED EMPLOYEE PENSION (SEP): 25% of net self-employment income, with a maximum of $56,000
DISCLAIMER
Thank you to all my readers for reading this week’s blog and other blog articles.
I am a proud nerd (my beautiful wife and daughter told me so) investment and finance blogger, with a Rutgers, MBA and Harvard, Advanced Management. I am a successful investor in equities and real estate and happy to share my personal finance and investment lessons learned with you. I am NOT however, a licensed financial advisor. Please do not construe my suggestions on this blog, as recommendations for your personal situation. For individual finance advice please seek your own licensed CPA or financial advisors.
Staff Writer; Styron Powers
One may visit this brother over at; Powers Investments Management and also connect via LinkedIn; S. Powers.