"The difference between ordinary and extraordinary is that little extra." ~ Jimmy Johnson
If you're a player or sports fan, you understand the importance of 'extra' effort. When it comes to your financial lives, that little extra could help you grow your savings exponentially. The good news is that the IRS has announced new Solo 401k contribution limits for 2017, allowing you to save extra for retirement.
In its latest retirement contribution limits' revision, the IRS has allowed small business owners and self-employed professionals save more for retirement.
New Solo 401k contribution limits for 2017: $54,000 ($60,000 with catch-up contributions for individuals above 50 years); up from $53,000 for 2016.
Example 1: Joe contributed $1,000 monthly to his retirement account, starting at age 30 until retirement. With an annual interest rate of 5%, compounded annually, Joe retired with a nest egg of $818,698.
Example 2: Michael contributed $1,083 monthly to his retirement account, starting at age 30 until retirement. With the same interest rate and compounding frequency as that of Joe, Michael ended up with $886,650 at retirement.
An extra $1,000 per year helped Michael exceed Joe's retirement savings by $67,952.
If you're planning to kick start your retirement savings, a self-directed Solo 401k might just be the right option for you. Seek professional advice when in doubt.