Experts Debate: Should You Max Out Your 401(k) and IRA Contributions in 2023?

The new year brings new changes to retirement savings, as the contribution limits for 401(k)s and IRAs have increased for 2023. However, not everyone believes that individuals should max out their contributions to these accounts given the current state of the economy and markets, as per a report by Bankrate on January 24, 2023.

Silvur Founder and CEO Rhian Horgan joins Yahoo Finance Live to share tips for retirement planning in 2023 and why it matters (Photo: Yahoo Finance)

Silvur’s founder and CEO, Rhian Horgan, believes that consumers have time on their side and that investing for a 20- to 30-year time horizon is crucial at this moment. When it comes to planning for retirement, the first step is to understand where you stand financially. This includes updating account balances and understanding how inflation will impact future spending. Horgan also suggests checking projected retirement income, as the cost of living adjustment for Social Security may have increased, according to a report by Yahoo on January 13, 2023.

When considering recent market performance, Horgan suggests thinking about investing over the long term and averaging contributions over the next few quarters. Additionally, she notes that many soon-to-be retirees are re-evaluating their plans, including where they will live in retirement and the cost of healthcare. With healthcare costs for retirees averaging around $5,000 per year, it’s important to factor this into retirement budgets.