One of the most important foundations of your financial future is saving for retirement. The government has provided tax advantaged accounts that allow you to save for retirement while deferring taxes on your earnings (or even watching your money grow tax free with Roth accounts). This allows you to grow your money more efficiently. One of the favors you can do yourself is to try to max out your retirement accounts.
Contributing the Limit to Your Retirement Accounts

Being able to put more in now can mean a better future later. Putting $500 a month total in your retirement accounts every month for 30 years will see you ending up with $610,244.38 if your annual return is 7%. However, if you put in your $21,500 maximum ($1,791.67 a month) each year, the story changes. Maxing out your account, you would end up with $2,186,709.04. Even with phase-outs, being able to max out your contribution would result in a much higher number when you are ready to retire.
Using Extra Income to Max Out Your Account
It is true that things will be slow to start. It will mean that you can’t immediately max out your retirement accounts. So, while you might not get that $2 million figure, as you build up your retirement account earnings, you should be able to put away more than $1 million by the end. Make maxing out your retirement accounts a goal, and then put your extra income toward reaching that objective.
Your cash flow investments will also help during retirement. Even though you will no longer be putting your alternative earnings into a retirement account after you retire, the passive earnings that you have cultivated will provide an income that can continue even after retirement. This will help you stretch your nest egg out longer, putting you in a more secure financial position.
There is no reason not to eventually max out your retirement contributions. With an eye toward earning extra income, it’s possible to create a plan that results in a big nest egg, as well as a cash stream for the future.
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