When you first began planning for retirement, you may have settled on a number that represented your retirement savings goal. You may also have committed to saving a certain amount of money each year, in order to meet that goal by your expected retirement date.
Hopefully, you considered the impact of inflation upon your plans for retirement. As prices of goods and services rise, you could need more income to continue enjoying the same standard of living. That may translate into needing a larger sum of money for retirement than you previously imagined.
Luckily, the IRS anticipates that inflation may drive a need for greater retirement savings. Recently the agency released new rules regarding annual contribution limits to tax-deferred retirement savings plans. These new limits allow workers to save more for retirement, with taxes deferred until distributions begin at some point in the future.
The new limits for 2015 are as follows:
- Workers can now deposit $18,000 per year into their 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan.
- Those aged 50 and over can make extra “catch up” contributions, up to $6,000 annually.
- If you’re 50 or older, you can contribute a total of $24,000 to a qualified retirement savings account in 2015.
If you’re worried about building a big enough nest egg for to provide for your retirement, these new contribution limits can help you achieve your goals. Make sure to adjust your payroll withholding as the new year begins, so that you’re on track to make the maximum allowable contribution to your account in 2015.
If you have any other concerns about the impact of inflation on retirement income planning, contact your insurance professional or financial advisor. Early, proactive retirement income planning may be the best way to ensure that your savings can adequately provide for a long and comfortable retirement.