What to do if you can’t max out your 401(k) contributions in 2023

One of the nice things about 401(k) plans is that they come with very generous annual contribution limits. This allows savers to sock away a nice amount of money for retirement and, at least in the case of a traditional 401(k), shield a lot of income from near-term taxes.

But maxing out a 401(k) is a pretty tall order. As of the third quarter of 2023, U.S. workers earned a median weekly wage of $1,118. That’s roughly $58,000 a year for those working 52 weeks.

Meanwhile, right now, 401(k) plan contributions max out at $22,500 for workers under the age of 50 and $30,000 for those 50 and over. Next year, these limits will rise by $500, to $23,000 and $30,500, respectively.

For a 40-year-old worker earning $58,000 to be able to max out their 401(k) in 2024, they’d need to part with about 40% of their income. That’s probably not doable. And even someone aged 40 earning $100,000 a year might struggle to part with almost a quarter of their pay.

Maurie Backman | USA Today

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