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Here's how many workers are saving the maximum in their retirement plans
CNBC
Thu, 10 Oct 2019 13:00

Here's how many workers are saving the maximum in their retirement plans

CNBC
Thu, 10 Oct 2019 13:00

Thomas Barwick | DigitalVision | Getty ImagesWe all want to max out our 401(k) contributions — and a select handful of taxpayers are doing just that.

Here's how many workers are saving the maximum in their retirement plans


Some 4.67 million taxpayers managed to squirrel away the maximum $18,000 in employee contributions to their 401(k) in 2016, according to data from the IRS.
Those who were age 50 and over were able to put away an additional $6,000 in catch-up contributions.

Older workers were among the most ambitious savers. In all, the over-60 crowd accounted for more than 1 million taxpayers who were able to save the maximum to their retirement plans that year.

Men made up the lions share of big savers. About 3 million of the taxpayers identified as male.
"This year, the maximum contribution is $19,000, plus $6,000 if youre 50 and over — its a lot to defer and still have money left over for living expenses," said Michael Landsberg, CPA and member of the American Institute of CPAs personal financial planning executive committee
Multiple priorities
A Hispanic woman of the Millennial Generation is looking at her financial statement while eating lunch at a local sushi restaurant. She is using her banks app to balance her monthly budget. Image taken in Utah, USA.

RichVintage | E+ | Getty Images
For many workers, saving for retirement is just another item on a massive list of priorities.

Huge contributions to your 401(k) — even if they help reduce taxable income — will leave you with less take-home pay.

"You dont want to make decisions that are detrimental," Landsberg said. "Youre paying off loans, you have credit card debt accruing – you dont want to have too low of a take-home check."

Striking a balance between the two can be difficult for employees, particularly when retirement plan service providers recommend that workers save at least 15% of their pretax income annually.

While this number sounds intimidating, it includes employer matches and profit sharing.

Be sure to save at least enough to get the match; its essentially free money.

To that end, while workers contributed a median 6% of their salary toward their 401(k) plans in 2018, the median contribution rate jumped to 9.8% when accounting for employer matches, Vanguard found.
Dont forget your Roth