The Expert Podcast

For those of you with 401K plans you'll notice that the federal government has allowed additional contributions to a 401k mostly based on the fact that inflation is affecting dollar amounts and budgets. So what the government has done was increased the maximum contributions to retirement plans for next year. The employee contribution limit will jump $2,000 to $22,500, so it's about a ten percent jump. Most of this is because of inflation and the fact that everything costs more, so putting more money into a retirement plan makes sense.

So the question is should you max out your 401K? Well, it's a tax advantage plan. It's like getting free money from the government, so of course the most you can put in the better. You want to make sure that you're maxing out your capability to save money for the future, save money for your retirement, and a 401k is a great way to do that. When you look to withdraw money from a 401k you want to plan at what age you're going to start doing that and how much money you're going to need and when you're going to need it.

But in the meantime, maxing out your 401K especially if you have an employer match, it's a no-brainer to make sure that you're getting the most money from the government, from your employer that you can because it's free money. It's like other people want to pay you to retire so why not take them up on it? But knowing that your max contributions has increased might be important to know so that way you can change your deductions from your paycheck to get that extra amount—you know, $22,000 a year.

That's close to a couple thousand a month, maybe 500 a week. If you can contribute that much, that'd be fantastic for your retirement.