You may have heard people over the years say “I’m maxing out my [401(k)/IRA/other retirement account]!” But what does that actually mean? In this post I am going to break it down.
“Maxing out” means you’re contributing the maximum amount to your 401(k). In 2022 that amount is $20,500. This max does not include employer match contributions. For IRAs the maximum contribution amount in 2022 is $6,000 and that is to either a Roth IRA or a traditional IRA.
Ideally, you would max out your 401(k) ($20,500), then max out an IRA ($6,000), then open a brokerage account (no maximum).
If you want to learn more about retirement accounts or investing in general let me know in the comments. If you found this post helpful follow my blog. If you’ve all my personal finance posts and cannot wait for more follow my socials and I’ll see you on the next post.
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