Financial Experts Say To Max Out Your 401(k) And Roth IRA Annually, But How Many People Can Actually Afford To Do It?

Core Insights - Maxing out retirement accounts is often recommended by financial experts as a strategy for building wealth, but it may not be feasible for everyone [1][2] Group 1: Contribution Limits and Statistics - The maximum contribution for a 401(k) in 2023 is $23,500, with an additional $7,500 for individuals over 50, and even higher limits for those aged 60 to 63 [2] - Only 14% of workers manage to max out their 401(k) contributions annually, according to Vanguard [2] Group 2: Realistic Perspectives from Households - A Reddit discussion highlighted the disparity in financial situations, with some high earners able to max out their retirement accounts while others struggle to contribute anything [3][4] - Individuals shared personal anecdotes, with one person earning $90K stating that contributing 26% of their income to max out is not feasible due to other financial obligations [4] - A single mother mentioned contributing only $300 a month, emphasizing the challenges faced by many in balancing retirement savings with immediate financial needs [4] Group 3: Financial Advice - Ramsey Solutions suggests that individuals should wait until they are completely debt-free, including their mortgage, before attempting to max out retirement accounts [5] - The company identifies three scenarios where maxing out retirement contributions is advisable: being debt-free, being a high-income earner, or needing to catch up on retirement savings [5]