If saving for retirement is good, isn't it better to save even more?
Next year, working Fools with 401(k) retirement accounts can stash away up to $15,500, the IRS has announced. That's up slightly from the $15,000 allowed this year.
If you're a more seasoned worker, 50 years or older, you can deposit some extra money known as a "catch-up contribution." That's another $5,000 you can tuck away in your 401(k), though that amount is unchanged from this year.
If you're reading those numbers and laughing out loud at your computer screen, resist for just a second the urge to point and click somewhere else.
Yes, that's a lot of money to set aside for that long-distant day when you finally put away the spreadsheets and sales presentations and take up stamp collecting full time. And some, whose contributions may be capped at a percentage of their salary, may not make enough money to deposit that maximum amount.
But let that figure inspire a little daydreaming for a moment, and imagine the potential for growing a really comfortable retirement nest egg. If you could get closer to contributing $15,500 -- or even $20,500, for those of you nearer to retirement -- wouldn't it make your day a little brighter?
Even if you can't hit that maximum target, here are some ideas for minimizing the pain while trying to maximize your 401(k).
1. Start contributing. Put something, anything, into that account. If the budget is extremely tight, contribute just 1 percent of your salary. You'll barely notice the ding in your paycheck. Later, when you take a look at what you've saved, you'll be surprised at how much you can build with small but consistent contributions. Just do it. OK, I stole that from Nike
2. Free money. If you're already depositing money into a 401(k), bump up your contributions so you get all of the free money your employer throws your way. Yes, I said free money. Most employers match a percentage of their workers' contributions. If you're leaving any of that money on the table, you're throwing away free money. (One more time: free money!)
3. Slow but steady. If you're getting all the matching contributions you're entitled to, but you want to save even more, set a goal. Let's say you're contributing 5 percent of your salary now, but want to contribute 10 percent. Envisioning that drop in take-home pay can be enough to cause paralysis. Instead, commit to increasing your contribution by 1 percent every month or two. That will give you and your budget time to adjust.
4. Bank your raise. Yes, I know you'd rather spend the extra money vacationing in Florida or buying vintage model trains, but can't you spare a few extra dollars for your future? You lived without the money before, so a raise is the best time to put away a little extra money without having to make any lifestyle adjustments.
If you're not convinced, or you need some help figuring out what to do with your account now that you have one, head over to the 401(k) center. It can help you by recommending excellent places to park that hard-earned money -- for example, an equity index fund with low fees, like the Vanguard 500 Index
To talk to other Fools about what's best for your specific situation, visit the Foolish 401(k)s discussion board.
For more Foolish 401(k)-ing:
- Down Payment Via Your 401(k)?
- The ABCs of the Roth 401(k)
- Changing Jobs? Take Care of Your 401(k)
- Beware the Botched 401(k)
Still interested in learning more? The Motley Fool GreenLight newsletter would be a great place to start. It covers personal finance topics with ways to help you add more cash to the bank. Take a free 30-day trial here.
Fool contributor Mary Dalrymple, alas, has never contributed the maximum to her 401(k), but she welcomes your feedback. Mary does not own shares of any company mentioned. The Motley Fool has a disclosure policy that's far from retiring.