Supercharge Your Retirement: The New 2024 401(k) Contribution Boost Can Turn Your Financial Tide

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Ah, the legendary 401(k)! If your employer provides a 401(k) as a retirement savings option, it’s absolutely crucial to seize the opportunity. Looking ahead to the future, the year 2024 brings exciting news for those investing in their company’s 401(k). With the impending increase in 401(k) contributions during that year, you have an even greater chance to boost your financial well-being. Take advantage of this enhanced plan to secure a brighter future for yourself and explore the myriad of opportunities these increased contributions can bring to your retirement savings. Start planning now and envision the potential benefits that await you in the years to come.

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Maximize Your Money: Unleash the Power of a 401(k)

I cannot stress this enough: an employer-sponsored 401(k) plan with a match is a golden opportunity for FREE MONEY! Don’t miss out on this! Make the most of this benefit and watch your dollars multiply by participating in it.

Many financial experts recommend starting an emergency fund and paying off debt before delving into investing. However, I hold a different perspective. In my view, it is wise to explore investment opportunities when your employer presents a 401(k) plan that includes a matching contribution.

Typically, the IRS has consistently raised the contribution limits over the years, taking into account various factors including the state of the economy. Given this ongoing trend of increasing 401(k) contribution limits, now is an opportune moment to reassess your participation.

Get Ready: The Breakdown of the New 401(k) Contribution Increase for 2024

The IRS released a notification on November 1, 2023, that the amount individuals can contribute to their 401(k) plans in 2024 has increased to $23,000, up from $22,500 for 2022. 

The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan has increased to $23,000, up from $22,500. On the latter, check with your retirement plan administrator to see if this applies to you.

With the pre-tax funds set to increase to $23,000 in 2024, surpassing the previous maximum 401(k) contribution of $22,500, your participation carries an added advantage. Although $500 may seem insignificant at first glance, its cumulative impact in the long run cannot be underestimated.

If you’re already maximizing your 401(k) contributions, that’s even better! The increase automatically boosts your savings without any effort required. (Of course, you’ll either need to inform your 401(k) administrator of your intention to raise your current contribution amount for 2024, or go online and make the adjustment yourself).

Discover if Your Company Offers this Perk: Match or No Match

What if your company has a 401(k) available (or another one of the retirement account options listed above) that you could contribute to, but haven’t taken the leap yet? Well, here’s a little friendly advice: Start by following my earlier suggestion—always contribute to your 401(k) up to the company match! It’s a smart move that sets you up for financial success while maximizing the benefits offered by your employer.

Victory Achieved: Unveiling the Winning Company Match and Next Moves

If your company matches 4% of your 401(k) contribution, it is highly recommended that you contribute at least 4%. By not doing so, you could potentially be missing out on significant financial benefits. It is important to understand that when your company offers a match, it essentially means they are providing you with free money. Take advantage of this opportunity to maximize your financial growth and secure your future.

Navigating the Absence of Company Match: How to Handle the Challenge

If, regrettably, a company match is not available, what can you do? Fear not, for a 401(k) remains an excellent avenue for setting aside funds towards your retirement. Your contribution is conveniently deducted from your paycheck (pre-tax), sparing you from immediate tax concerns. You can focus on growing this money through investments, benefiting from the power of compounding interest until the day you retire.

If your company doesn’t provide a match, you can still kickstart your retirement savings by allocating 3%-5% of your income. It’s a perfect starting point – substantial enough to make meaningful progress, while remaining manageable enough to avoid compromising your paycheck.

Is a $500 401(k) Boost Worth It? Unraveling the Significance

Let’s talk about the 401(k) contribution increase happening in 2024. I understand, $500 might not seem like much at first glance. However, let me assure you, over time, that seemingly small amount can grow significantly. Allow me to explain why this increase is worthy of attention and consideration.

While it may seem insignificant, the impact is truly substantial. Imagine the compounding effect of these year-after-year increases, with reinvested, tax-deferred dividends flowing into your retirement account. It’s a powerful strategy that can greatly enhance your financial security.

Looking at it from a different perspective, let’s consider the progress made in 401(k) contributions. From 2015 to 2017, the maximum contribution remained steady at $18,000, but then in 2020 and 2021, it increased to $19,500. This was followed by another hike to $20,500 in 2022, $22,500 in 2023, and now, another boost in 2024. Do you see how these annual increments ultimately benefit you in the long run?

For those who have an aggressive investing approach and are willing to go all-in or are far from retirement, even a mere $500 can yield substantial gains. You decide your risk tolerance and your time frame and then work from there.

The Art of 401(k): Mastering Your Retirement Investments

If you enjoy monitoring your investments regularly, you might want to consider allocating a smaller portion or percentage (from your overall pre-tax contribution) that you feel comfortable contributing to your retirement account. Spread out this smaller amount over the course of 2024, but allocate it specifically to one fund within your retirement account. This will help optimize your investment strategy while still aligning with your preferences and goals.

Unveiling the Market’s Intricacies: A Deep Dive into Your 401(k)

Over the course of 12 months, you will have the opportunity to observe the intricacies of the market as they unfold. This may inspire you to consider increasing your contribution percentage in the subsequent year. It is an exciting journey that relies on your response to daily market fluctuations, even on less favorable trading days. Despite the occasional challenges, this experience has the potential to be highly rewarding.

Naturally, it is not advisable to have your entire retirement account in a single account. It is crucial to allocate your funds appropriately, taking into consideration your risk tolerance and retirement timeline. Moreover, it is essential to actively monitor your retirement account, have it reviewed by a professional, and, if needed, rebalanced on an annual basis (it only takes about 15 minutes to check your retirement health regularly).

Discover Your Retirement Options: Exploring the Myriad of Choices at Your Fingertips

Take the time to acquaint yourself with the various retirement and savings options available. It’s always beneficial to be well-informed about your choices, regardless of your current stage in retirement savings or career.

Fidelity Investments released its Q2 2023 analysis stating that average retirement account balances increased for the third straight quarter.

The average IRA balance[4] was $113,800 in Q2 2023, a 5% increase from last quarter, 7% jump from 5 years ago and 41% increase from 10 years ago. The average 401(k) balance[5] increased to $112,400, up 4% from Q1 2023, an 8% increase from five years ago and 39% increase from 10 years ago. For 403(b)s, the average account balance[6] increased to $102,400, up 5% from last quarter, up 23% from five years ago, and a 65% increase from 10 years ago.

Ignite Your Path: Harness the Retirement Planning Calculator to Determine Your Perfect Nest Egg

For a more exact calculation, use a retirement planning calculator to assist you in identifying exactly what you’ll need to set aside and live a comfortable life in your later years, these tools can be invaluable. They enable you to plan and evaluate the level of caution or ambition you can afford when managing your retirement funds.

You should know the limits for individual retirement accounts as well. Beginning in 2024, individuals will have the opportunity to contribute up to $7,000 to their IRA, which represents an increase from the previous limit of $6,500 set in 2022. Although the additional annual amount may seem modest at just $500, its cumulative effect can be quite substantial.

You can save for retirement using both an IRA and a 401(k), just make sure to fully grasp the distinction and familiarize yourself with the maximum contributions for both retirement planning options. You have numerous avenues available to save for retirement!

50 + Fabulous: Unlocking Catch-Up Contributions

For 50 and above (like myself), the SECURE 2.0 Act of 2022 (SECURE 2.0) has made amendments to the IRA catch-up contribution limit. The limit now includes an annual cost-of-living adjustment while remaining at $1,000 for 2024.

For the year 2024, the catch-up contribution limit for employees aged 50 and above participating in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan remains at $7,500. This means that individuals aged 50 and older can now increase their contributions to a maximum of $30,500. It’s important to note that the catch-up contribution limit for employees aged 50 and over participating in SIMPLE plans remains unchanged at $3,500 for 2024.

Maximize your confidence in a secure future by strategically leveraging tax-advantaged accounts in 2024.

Secure Your Financial Future with Confidence

While saving for retirement may not have the same appeal as glamorous and exciting endeavors, the prospect becomes slightly more enticing when considering the opportunity for financial growth through free money and the recent increase in 401(k) contributions. Delaying your investment would only hinder your progress, so why wait? Start securing your future now.

Retirement Planning Made Smarter: Unlock The Benefits with Burhoe Insurance Solutions

Planning for retirement is a crucial aspect of our lives, regardless of whether it’s just five years or a distant 25 years away. It demands thoughtful decisions regarding the amount of money we save and the retirement planning options we embrace. These choices are pivotal, as they can determine whether we enjoy the financial freedom and lifestyle we desire during our golden years or face economic hardships. For assistance in attaining a secure lifestyle during retirement, reach out to Burhoe Insurance Solutions. Let us guide you on this journey with expertise and care.

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Admittedly, this particular checklist has a larger-scale focus on your overall financial picture, but I genuinely feel that getting your finances organized is essential.

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