Retirement Planning, Elder Law, and Senior Finance Turbocharge Retirement Savings 5/11/2022 | By Sandra Block Sandra Block of Kiplinger’s Personal Finance suggests ways that readers can boost their retirement savings, including tax breaks, an IRA, 401(k), etc. Jack Towarnicky, an employee benefits consultant, has changed jobs 13 times over the past 30 years, but one aspect of his career has remained consistent: If an employer offered a 401(k) plan, he enrolled and contributed the maximum allowed. His wife, Debbie, a retired teacher, also contributed to her retirement plan. Thanks to their disciplined savings habits, “we have a lifetime of savings in 401(k) and 403(b) plans, and this son of a firefighter is certain to become part of a middle-class millionaire household someday,” Towarnicky says. The millionaire club is growing. More than 440,000 participants in 401(k) plans managed by Fidelity Investments had balances of more than $1 million in the fourth quarter of 2021. A total of 112,880 participants in the federal government’s Thrift Savings Plan had more than $1 million in their savings plans as of Dec. 31. Saving $1 million for retirement savings may seem out of reach, particularly if you have competing demands on your money, such as student loans and credit card debt. Inflation presents another hurdle. An analysis by Moody’s Analytics found that the average American household is spending an additional $276 a month on goods and services because of higher prices. There are two kinds of 401(k) plans: traditional and Roth. With that in mind, it’s important to take advantage of all the savings incentives available to you. Perhaps the most generous incentive comes in the form of a matching contribution from your employer. Employers that offer this benefit typically match 3% to 6% of your pay, but you usually must contribute to qualify. So even if funds are tight, try to contribute at least enough to get the match – otherwise, you’re leaving free money on the table. Uncle Sam offers plenty of retirement savings incentives too. One of the most lucrative – and often overlooked – is the Saver’s Credit. If you fall within the income limits, you can claim a tax credit of up to $1,000 for singles or $2,000 for joint filers. The credit is based on 10%, 20% or 50% of the first $2,000 ($4,000 for joint filers) you contribute to a 401(k), traditional IRAs or a Roth IRA. For 2022, single filers with adjusted gross income of $34,000 or less may be eligible. Married taxpayers who file a joint return must have an AGI of $68,000 or less. Related: Building a retirement inflation hedge As your income rises, you should be able to stash more in retirement plans. In 2022, you can invest up to $20,500 in your 401(k) plan, or $27,000 if you’re 50 or older. Contributions are tax-deferred if you invest in a traditional 401(k). If your employer offers a Roth 401(k), contributions are after-tax but tax-free when you take withdrawals in retirement. If you are self-employed, you can contribute 20% of your self-employed net income, up to a maximum of $61,000, in a SEP IRA in 2022. © 2022 The Kiplinger Washington Editors, Inc. Distributed by Tribune Content Agency, LLC. Read More Sandra Block Sandra Block is a senior editor at Kiplinger’s Personal Finance magazine. For more on this and similar money topics, visit Kiplinger.com.