Maxing and Relaxing

By: Joe Morgan

May 4, 2023 | Savings TargetSavings AccountRetirement401kTax-DeferredLifestyle

Prefer to listen rather than read? Pair this post with Deliberate Money Moves Podcast: Maxing and Relaxing.

So, you want to live comfortably in your future years and you’re not so sure it’s going to happen. What to do?

The best step is to maximize your savings. If you’re not already putting the most you can into your retirement accounts, consider starting now.

For a typical 401(k) plan, the maximum you can contribute and get a tax deduction each year is currently $22,500, unless you are over 50-years old. At that point, you can set aside another $7,500 each year for a total of $30,000. I realize that may sound like a lot of money to set aside for a long time, but the payoff is huge.

Find a way to get to your maximum contribution limit, without borrowing, of course, because these funds will grow tax-deferred until you tap them. If you begin planning now, that may not be until after age 70, and 25-30 years of tax-deferred growth can add significantly to your lifestyle in your later years.

And if you’re thinking your current lifestyle spending won’t allow you to max your 401k, consider this. Without appropriate savings, you are setting yourself up for a drastic fall in your lifestyle at some point in the future.

I think it’s better to figure out how to adjust your lifestyle now, by choice, versus later, by necessity. Don’t you?

So, what do you think? Are you saving enough for retirement? Have you seen your expected cash flows for life laid out in a year-by-year fashion? Do you have confidence your savings is being invested the best way?
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