Boost Your Retirement Plan: Higher Contributions and the Importance of a Living Trust
Retirement planning is evolving, and staying informed about these changes is critical for securing your financial future. Starting in 2025, the IRS will increase the maximum contribution limits for 401(k) and similar retirement plans. Individuals will be able to contribute up to $23,500 annually, up from $23,000 in 2024. Workers aged 60 to 63 can make additional “super” catch-up contributions of $11,250, allowing a total annual contribution of $34,750.
These changes, part of the SECURE 2.0 Act signed into law in 2022, aim to enhance retirement savings opportunities. However, data from Vanguard Research shows that in 2023, only 14% of retirement plan participants maximized their 401(k) contributions. While higher limits are beneficial, financial constraints often prevent individuals from fully utilizing these opportunities.
Beyond maximizing contributions, incorporating a living trust into your retirement plan is a strategic way to ensure your assets are protected and distributed according to your wishes. A living trust offers several advantages:
- Control Over Assets: You retain control during your lifetime and can specify how assets are managed or distributed after your death.
- Privacy: A living trust avoids probate, keeping your financial affairs confidential.
- Flexibility: Amend or revoke the trust as your circumstances change.
- Incapacity Planning: A successor trustee can step in to manage your affairs if you become incapacitated, avoiding court intervention.
- Avoiding Probate: A living trust bypasses the probate process, saving your heirs time, legal fees, and the stress of court proceedings.
While increased contribution limits can boost retirement savings, they are only part of the equation. A living trust ensures your assets are managed efficiently, avoids the time-consuming probate process, and provides peace of mind for you and your family.
Create a living trust with AmeriEstate. Schedule a free consultation today.