Color of Money: Contribute as much as you can to your 401(k) -- just in case

Michelle Singletary on

Still unchanged at $5,500 is the annual limit for IRA and Roth contributions. The catchup provision for people 50 or older stays the same at $1,000. There is also a catchup contribution limit for employees 50 and over who participate in a 401(k) or other workplace retirement plan. That too won't increase and remains at $6,000.

With all the concern about people having enough money to retire, why would anyone in Congress consider the tax-deferred vehicles fair game? They're the best way to encourage people to save.

And it's not like the accounts have become a tax haven for the uber-wealthy. In the second quarter of this year, the average 401(k) balance hit a high of $97,700, and the average IRA balance was $100,200, according to Fidelity Investments. The average TSP account balance for employees under the Federal Employees Retirement System (FERS) is $133,609.

Sure, some people -- after two or three decades of saving faithfully every paycheck -- have amassed a great deal of money in workplace plans. In the TSP, 16,475 participants have crossed the $1 million mark, according to a spokesperson for the Federal Retirement Thrift Investment Board.

Mike Causey of Federal News Radio writes often about the TSP "millionaire's club." "Aside from a few wealthy political appointees from the current and past administrations, the vast majority of people with million-dollar [TSP] accounts were individuals with careers averaging 28 years, who invested in the C and S stock indexed funds through good times and bad, and who did not panic and retreat to the 'safety' of the treasury securities G fund during the Great Recession," Causey wrote in a recent column.

If you're in this club, send me an email to I'd like to share how you reached the millionaire milestone.

Whatever happens with workplace retirement accounts, you're still likely to hear that you should "max out." This advice seems all the more critical given recent events.

There have been some sacred-cow tax breaks that no one thought Congress would dare touch. The mortgage-interest deduction is one. Another was employer-sponsored retirement plans.

It's a new day in politics, and anything can happen. So my advice is: Contribute as much as you can now -- while you can.


Readers can write to Michelle Singletary c/o The Washington Post, 1301 K St., N.W., Washington, D.C. 20071. Her email address is Follow her on Twitter (@SingletaryM) or Facebook ( Comments and questions are welcome, but due to the volume of mail, personal responses may not be possible. Please also note comments or questions may be used in a future column, with the writer's name, unless a specific request to do otherwise is indicated.

(c) 2017, Washington Post Writers Group



blog comments powered by Disqus

Social Connections


Ask Shagg Barney & Clyde Non Sequitur Dustin Clay Bennett Bizarro