Did you max out your retirement savings accounts last year?
I did. I contributed close to the maximum $15,500 allowed for 401(k) account in September and $5,000 for IRA account in October. After missing out a large portion in 401(k) in 2007 after changing the job middle of the year, I determined to take advantage of the tax-free growth of money in 401(k) account last year, despite no company match whatsoever because I am saving for my own retirement. With that determination, I started the year contributing very aggressively, setting aside 20% of my salary into my 401(k) account. Though from what I can see now that doesn’t seem to be a good strategy as stock markets basically collapsed in the second half of the year, I am still glad I finished my goal early. For IRA account, I divided the $5,000 annual contribution into 4 parts and invested a quarter every three months. I have been using this approach for years and it actually served me quite well: For one, I don’t’ have the pressure to make a large contribution at once; for two, I could better migrate the risk by spreading my investments throughout the year.
For 2009, I will continue to employ the strategy I used last year to build my retirement funds. In fact, new changes in 2009 retirement account contribution limits, especially 401(k) accounts, make it even easier to save more for retirement:
- 2009 401(k) contribution limit goes up to $16,500. If you are age 50 or older, you can make another $5,500 catch-up contribution.
- 2009 IRA contribution limit remains the same at 2008 at $5,000, but the phase-out limit has been increased from $159,000 – $169,000 for couple filing jointly in 2008 ($101,000 – $116,000 for single) to $166,000 – $176,000 in 2009 ($105,000 – $120,000 for single).
Is maxing out your retirement accounts part of your 2009 resolution?
