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A New Way to Save More for Retirement

The IRS wants you to have more money for retirement! They won’t deposit a nice, round sum into your 401(k) themselves, but they will allow you to invest an additional $1,000 into your retirement accounts starting this year.

Investing an additional $1,000 a year could potentially add about $250,000 to your $6.5 million retirement fund! To accomplish that, you’d have to max out your 401(k) contributions at the new limit of $17,500 a year and your Roth IRA contribution of $5,500 a year. And you’d have to keep it up for 30 years.

While most of us don’t have $23,000 a year for retirement investing, the IRS’s action is a great reminder to make sure we’re investing enough to meet our retirement goals. And the good news is, you don’t have to invest 23 grand to have a comfortable nest egg for retirement.

The One Factor You Can Control

Successful retirement investing involves three factors: rate of savings, rate of return and number of years until retirement. You have very little control over your rate of return, and even the amount of time you have until retirement can change unexpectedly. The only factor you can control is how much you save—and if you don’t save enough, you’ll never get a big-enough return or have enough time to save what you need for retirement.

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By following Dave’s recommendation to invest 15% of your income, a person making an average $40,000 salary could have almost $1.8 million by the time he retires. But if he holds back and invests just 13% rather than 15% over 30 years, he cheats himself out of $300,000—a loss of more than 16%.

The key is to stay disciplined about investing 15% each year and to increase retirement-plan contributions as your income increases. A recent survey of retirees shows that bumping up those contributions was necessary for them to build a nest egg they can rely on throughout their retirement.

Are You Saving Enough?

Are you making the most of the money you have to invest for retirement? If not, you’re missing out on hundreds of thousands of dollars. You can find out by talking with one of Dave’s investing Endorsed Local Providers (ELPs). They’re retirement experts, and talking with one is free! Find your nearest investing ELP today!

Ramsey Solutions

About the author

Ramsey Solutions

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners.

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Thank you!  Your guide is on its way.

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