Contribution limits for a 401(K), 403(b), and most 457 plans will rise to $17,500 (from $17,000). The catch-up provision for those over age 50 is $5,500. Be sure to take advantage of the over 50 limit if you feel that you haven’t saved enough for retirement.
Simple IRAs will increase to $12,000. Traditional IRAs and Roth accounts will increase to $5,500 with the catch-up for those over age 50 still at $1,000. There is an income limit for contributing to a Roth. The amount that can be contributed starts to phase out if your adjusted gross income is $178,000 – $188,000 for joint filers and $112,000 – $127,000 for singles. Remember, contributions to a Roth are not tax deductible but are tax-free for any withdrawals. Converting all or some of your existing IRA to a Roth is available to all income brackets. If you have any questions, please contact your advisor.
Saving for retirement is crucial and the unfortunate truth is that most people have not saved enough. The consensus for recommended retirement spending is 4% of your portfolio assets. If you have saved $500,000 throughout your working life, the yearly spending would be $20,000, plus Social Security.
Barbara Gray, CFP®