There is good news for retirement savers in 2022

Saving for retirement is one of the most crucial financial tasks on your to-do list. You will need money invested to generate income to supplement Social Security, and the more you can save each year of your career, the better off you will be.

That’s why this good news about retirement savings accounts in 2022 should get you excited.

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Two good news for savers

There is good news for savers about 401 (k) and IRA accounts.

Here’s how the 401 (k) change next year

For those with a 401 (k) workplace, contribution limits increase in 2022. In 2022, workers can invest a maximum of $ 20,500, up from $ 19,500. Catch-up contributions, which are available for workers aged 50 and over, will remain the same at $ 6,500.

While an increase of $ 1,000 in the contribution limit may not seem like much, the reality is that an additional $ 1,000 invested each year in your 401 (k) could lead to a nest egg of up to 282,224. $ more (depending on when you first start contributing that extra amount to your savings.) For those who are already maxing out their 401 (k) s, the ability to put that extra money into their account could make a huge difference. in what they will eventually get.

Here’s how IRAs are going next year

Of course, not everyone has access to a 401 (k) workplace. But there is also good news to share about IRAs.

While the contribution limit unfortunately does not increase for this type of account, the income limits for making deductible contributions to a traditional IRA are increasing, as are the income limits for making any type of contribution to a Roth IRA.

Here’s how those limits change for traditional IRAs:

  • If you are a single filer covered by a workplace pension plan, the eligibility limit for a full contribution increases from $ 66,000 in 2021 to $ 68,000 in 2022. The phase-out limit increases from $ 76,000 at $ 78,000.
  • If you are a married spouse filer and are personally covered by a workplace pension plan, the income limit for full eligibility increases from $ 105,000 in 2021 to $ 109,000 in 2022 and the waiver limit progressive increases from $ 125,000 to $ 129,000.
  • If you are a married spouse filer whose spouse is covered by a workplace pension plan even though you are not, the income limit for full eligibility increases from $ 198,000 to $ 204,000 and the phase-out limit increased from $ 198,000 to $ 208,000.

And for Roth IRAs, here are the changes:

  • For single filers and heads of households, the income limit for full eligibility increases from $ 125,000 to $ 129,000. The phase-out limit is increased from $ 140,000 to $ 144,000.
  • For married spouses, the income limit increases to $ 204,000 for full contributions, from $ 198,000. And the elimination limit goes from $ 208,000 in 2021 to $ 214,000 in 2022.

If you previously couldn’t contribute to these accounts because your income was too high but you are now in the range where you qualify, you will have a great new opportunity to save for your retirement years with the help of Uncle Sam.

It is important to keep abreast of these exciting changes, as preparing for retirement requires taking advantage of all the tax breaks available so that the government can help you keep your senior citizens more secure.

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