Fell Behind on IRA Contributions in 2022? This One Move Could Help You Avoid a Repeat in 2023

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It’s important to fund your retirement savings consistently for future financial security. 

In 2022, IRA accounts maxed out at $6,000 for savers under age 50 and $7,000 for those 50 and over. But many people struggled to put any money in an IRA at all.

We can attribute some of that to inflation. Consumers were forced to grapple with higher living costs across the board last year, from food to utilities to rent. That no doubt forced many people to cut back on funding their IRAs out of necessity.

But while inflation may be the reason some people didn’t meet their 2022 IRA savings goals, for others, missing those goals may have come down to a faulty strategy. And one specific move could help you avoid a repeat scenario this year.

When you put your savings first

Last year, you may have decided that you’d fund your IRA with unspent money from your paychecks at the end of the month. But if that strategy didn’t quite work out, well, that’s not surprising.

Money has a way of slipping away from us, whether due to small unplanned purchases like the store-bought coffee you crave, or surprise bills that can’t be avoided, like car repairs or medical copays. That’s why you may have more success in funding your IRA this year if you put the process on autopilot.

Many people commonly set up automatic transfers to a savings account from a checking account. You can do the same thing with your IRA if your account allows automatic transfers, which it probably does.

This year, IRAs max out at $6,500 for savers under 50 and $7,500 for those 50 and over. So let’s say you’re aiming to max out and you’re 42 years old, which means contributing about $540 a month. Rather than tell yourself you’ll move that money over yourself at the end of the month, set up an automatic transfer so that the money leaves your checking account at the start of the month, before you’ve spent it. That way, you’ll be more likely to meet your savings goal.

Make up for 2022

No matter why you didn’t save as much in your IRA as you would’ve liked to last year, the good news is that a strong 2023 could help compensate. But you definitely don’t want to fall short of your IRA savings goal two years in a row.

Putting your savings on autopilot could make you more likely to stick to this year’s goal, and it will also give you one less thing to think about every month. And remember, you can automate your IRA contributions no matter how much money you’re putting in. Even if you can only afford a $25 monthly contribution, it’s worth automating it so you know you’re staying on target.

Funding your IRA consistently during your working years could make it so your senior years are more financially comfortable and worry-free. So it’s worth making that effort, even if it means giving up other things or limiting your spending along the way.

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