IRA Contribution Limits Are Rising in 2023. Here Are 4 Ways You Can Save More

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  • IRAs currently max out at $6,000 for savers under 50 and $7,000 for those 50 and over.
  • Next year, these limits will increase by $500.
  • You can cut back on a few expenses and put your contributions on autopilot to help you add more money to your IRA.

It pays to max out your contributions if you can.

The beauty of saving for retirement in an IRA is getting to enjoy tax breaks while funding your future. Traditional IRA contributions go in tax-free, so if you put $3,000 into one of these accounts, that's $3,000 of income the IRS can't tax you on.

Meanwhile, each year, the IRS sets a limit for IRA contributions based on age. This year, savers under the age of 50 can put up to $6,000 into an IRA, while savers 50 and over get a $1,000 catch-up that raises their maximum contribution to $7,000.

Next year, the annual contribution limits for IRAs are rising. Savers under 50 will be able to put up to $6,500 into one of these accounts, while IRAs will max out at $7,500 for those 50 and over. And to be clear, it doesn't matter whether you're putting money into a traditional IRA versus a Roth IRA -- the annual contribution limits are still the same.

Of course, a lot of people have struggled to make IRA contributions this year because they've needed to spend more money on basic living costs. We can thank inflation for that. But here are a few things you can do to sneak more money into your IRA in 2023.

1. Stick to a budget

The simple act of creating a budget could give you a much better sense of where your money goes month after month. And that could, in turn, make it easier for you to find room for more generous IRA contributions. You can set up a budget in a notebook or spreadsheet. But it also pays to check out the different apps you can use for budgeting.

2. Trim a few small expenses

There may be certain expenses you're paying for now that you can technically do without. If you're serious about boosting your retirement savings rate, it may be time to cut back on those non-essentials. That could mean cutting the cord with cable and replacing it with a much lower-cost streaming service, or canceling the gym membership you don't use all that often anyway.

3. Get a side hustle

It may be that your income is completely eaten up by essential living expenses. If that's the case, a side hustle could be your ticket to higher IRA contributions next year. Think about the skills you have and what your schedule looks like. From there, you can narrow down your side gig options and, ideally, choose something that's not only lucrative, but fairly seamless to work into your weekly routine.

4. Put contributions on autopilot

Employer-sponsored 401(k) plans make it easy to save steadily for retirement, since contributions are deducted from workers' paychecks automatically. Well, some IRAs give you the option to employ a similar setup. If your IRA offers an automatic savings feature, you can arrange for a portion of each paycheck to leave your checking account and land in your retirement plan every month.

The more you save in your IRA in the near term, the more wealth you stand to build in the long term. It pays to take advantage of next year's higher IRA contribution limits, even if it means making adjustments to your spending and schedule to allow for that.

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