Millions of Americans want to do a better job of saving for retirement. An individual retirement account, or IRA, can be a great way to not only build a retirement nest egg, but to save money on your taxes as well.

Contributing the maximum allowable amount to your IRA in 2019 would be a great step on the road to financial freedom in retirement. However, many people can't afford to contribute thousands of dollars all at once, so here's how much you need to save out of every paycheck in 2019 in order to maximize your IRA contribution.

Jar of coins labeled retirement on top of notebook and next to a calculator.

Image source: Getty Images.

The 2019 IRA contribution limit

In 2019, the IRA contribution limit is $6,000, with an additional $1,000 catch-up contribution allowed if you're 50 years old or older. The base contribution has increased by $500 from 2018, while the catch-up allowance has remained the same.

It's important to point out that this is a per-person limit, not a per-account limit. In other words, if you have more than one IRA, your combined contributions to all accounts cannot exceed your appropriate limit.

All Americans with earned income are eligible to contribute to a traditional IRA, but the ability to take the valuable tax deduction for contributing is income-restricted if you are eligible to participate in an employer's retirement plan such as a 401(k). On the other hand, the ability to contribute to a Roth IRA is income-restricted for everyone, meaning that anyone who earns more than a certain threshold cannot contribute to an account at all.

How much to save if you want to max out your IRA contributions

While it's certainly useful to know the IRA contribution limit, most people understandably can't contribute all of this as one lump sum. It's also not an ideal situation to try and max out your contribution over the last few months. It can be significantly easier to spread out your contributions evenly throughout the year.

With that in mind, here's how much you'd need to set aside out of every paycheck in order to max out your IRA contribution in 2019.

If You Get Paid...

Per-Paycheck Contribution if Under 50

Per-Paycheck Contribution if 50 or Older













Data Source: Author's own calculations. Amounts are rounded down to the nearest cent.

One more note: If you're reading this and we're already well into 2019, note that you can technically make your contributions until the April 2020 tax deadline. So, if you still want to spread out your contributions and we're still within the first few months of 2019, just start the one-year clock with your first contribution. You can still divide your 2019 contribution evenly over an entire year.

What maxing out your IRA contribution could mean to you

There are a few good reasons why it's such a good idea to max out your IRA contributions. For starters, there are some great tax benefits to doing so. Traditional IRA contributions may be tax-deductible, and although Roth IRA contributions aren't deductible, qualified withdrawals will be completely tax-free.

While the tax benefits are certainly nice, it is the long-term tax-deferred compounding power that is the real reason to contribute as much as you can to an IRA.

Let's say that you contribute $6,000 to an IRA every year, and that you maintain an age-appropriate allocation of stock and fixed-income investments. Historically, it's been reasonable to expect annualized returns of about 7% from such a strategy over long periods of time.

Here's the point: $6,000 annual contributions compounded at this rate for 10 years would grow to about $83,000. After 20 years, you'd have $246,000, and after 30 years, you'd have built a $567,000 nest egg. After 40 years -- well, you get the idea. Maxing out your IRA every year over a period of decades could provide serious financial security in retirement.

Ensure your success: Make it automatic

As a final piece of advice, if you plan to contribute the maximum to your IRA in 2019 and make gradual contributions throughout the year, it's a smart idea to make it automatic. In other words, if you're under 50 and get paid biweekly, set up an automatic transfer from your bank account for $230.76 to take place every payday. Not only will this save you the hassle of having to remember to make 26 separate contributions throughout the year, but doing so will make your retirement contributions a part of your routine and will greatly increase the chances that you'll actually max out your IRA contributions in 2019 and beyond.