With Washington roiling from one crisis to another, many Americans feel uncertain about the impact of changing tax rates and how to achieve retirement security in a fragile economy. Economic uncertainty can make it harder to plan for the future. But, especially at times like this, workers should focus on what they can control.
No matter your tax rate, contributing to a 401(k) can help you save money on taxes and boost your retirement security.
Your contributions to a traditional plan are not included in your taxable income, and earnings on Roth contributions are tax-free. The good news for savers is that in 2013 401(k) limits go up to $17,500, and employees aged 50 or over can contribute an additional $5,500.
But, at the end of 2011, the average account balance in 401(k)s nationwide was just under $60,000. If you’re not sure you’re doing all you can to lower your taxable wages and secure your retirement, FINRA’s new 401(k) Save the Max Calculator does the math for you and helps you determine whether you are doing all you can to reduce your tax burden by saving for retirement.