Numbers for 2009

Money magazine lists the following "numbers to know" in its January issue:

• $16,500 -- 401(k) contribution limit (50 and older: put in an extra $5,500)
• $5,950 -- Family HSA contribution limit
• $106,800 -- Maximum amount of earnings subject to Social Security taxes
• $5,000 -- IRA contribution (50 and older put in an extra $1,000)

Here's how we stand on each of these:

1. Yep, we'll fully fund our 401(k) in 2009 -- just like we have been for years and years now.

2. Yep, we'll put the max in our HSA.

3. Ouch! I just hope I get SOMETHING back from SS for the boatloads of money I (and my employers) have put in.

4. We also contribute $5,000 for each of us to IRAs (non-deductible).

How about you? Where do you stand on these numbers for 2009?

Comments

[Stephen]

1) Only contributing about $4000 to my 401k (to get my full employer match), but am going to consider contributing more this coming year. This is dependent on my downpayment savings strategy, which should be figured out by next week.

2) I only put in enough to my HSA to cover deductibles and a pair of new glasses and contacts. I'm single, so definitely not maxing this out.

3) Don't get my started on SS as a 24 year old.

4) Maxed out in 2007 and 2008 and will continue to do so!

[MInTheGap]

1. New Job, so I don't get the 401k option until June. Was putting in a hundred a month, but will be putting in more.
2. Hope to leverage old 401k plus pension plan to max out HSA for this and next year.
3. Tax is always an ouch.
4. Don't know-- may have to put more in this one because of tax issues with losing job/getting new job and other things this year.

Doesn't this seem like a whole boat load of money in retirement? No Roths?

[chris]

- My first year saving for retirement! $3500
- HSA $1400 (I like it but they are not for everyone)
- The death of Social Security is highly over rated. If nothing is done, some time in the 2040's benefits will be have to be cut by 25%. That is the "crisis."
- 2009?

[Meg]

1. I'll put in approximately $10,000 to my Roth 401k in 2009.

2. I don't use my HSA (don't need it).

3. I for one think SS will not only BE here when I retire (I'm in my 20s) but that it will be a more robust and larger system - we're going nowhere if not towards socialism, whether we like it or not.

4. I'm maxing my Roth IRA too.

[Ed]

1. I was just promoted at work, effective January 1. When I signed the new contract in HR, I also turned in the form to increase my 401(k) deferral amount in order to put the whole raise into the 401(k) plan. As with other raises and bonuses, I figure if I don’t see the increase in my take home check, I won't miss it. For 2009 that brings my annual contribution up to $7,500. I'm working to continue increasing the 401(k) deferral amount to the maximum ASAP, then enroll in the 457 plan for more retirement savings.

2. I use the HMO health insurance plan offered at work instead of the HSA, POS, or PPO options.

3. I don't know what to say about the future of Social Security.

4. I've maxed out my Roth IRA for a few years now and am set to continue monthly contributions for the $5,000 max again in 2009.

Thank you for the great blog FMF. I've been reading for over a year now and am continually finding so much helpful information here. Thank you for all the hard work.

[C]

1) My husband and I both max out on our 401K type plans.
2) Is HSA similar to FSA? We put $5000 for Child care FSA and $1500 for FSA Health Care Expenditures (we find that $1500 is enough in conjunction with Health Insurance)
3) Since we're putting in so much to our retirement & FSAs, we report much less income.
4) We both contribute max to our Roth IRAs.

We're both mid-thirties but feel like we should be doing much more........

[FMF]

Gap --

I don't qualify for a Roth based on my income. (good and bad news.) ;-)

[tim]

1,4 maxed out both 401k and Roth. (I have a graduate degree and make a good income (~100K in Oregon), but am a little behind because I was in school for so long)

2. I don't use an HSA

3. It unclear to me what will happen to SS, I can see the system imploding and I can see the US turning full on socialist. I don't view my SS tax (including my employer's contribution) as anything other than part of my federal income tax.

If I were to get fair value for in my retirement from my SS contributions, then my total (Fed, State) average tax rate is ~22%. If I never see a dime from SS, then including what my employer pays for me, my average tax rate is ~35%. That's a big difference.

[Sarah]

I'm going to have an annoying year fundingwise--I'm going to be in a term job this year, and term employees don't get to contribute to the retirement plan. So I have to (a) roll over my current 401(k) into an ordinary IRA, (b) set up a Roth IRA with the same company, and (c) figure out the best thing to do with my planned retirement savings that exceed the $5K.

I don't think my new job will have an FSA, which I regret. Each year I've (a) increased my contribution and (b) ended up using it all.

[CherryBlossom]

100% of any excess income is going into the emergency fund. Thinking of using a Schwab account for this and using the 2% cash back card.

[nickel]

FMF: Do you guys have a high deductible health insurance plan? I'm assuming so since you said you're using an HSA. Any thoughts on these things? Feel free to point me to another link if you've written about your experiences elsewhere.

[mbhunter]

I only contribute to my 401(k) type account to the extent I get maximum match.

Didn't I hear something about the SS limit being repealed?

SS is a joke anyway. You may get a check but it won't go very far.

[FMF]

Nickel --

Here are some details on what my company does:

http://www.freemoneyfinance.com/2007/12/my-company-is-m.html

And here's an unusual use of HSA accounts from a guest poster:

http://www.freemoneyfinance.com/2008/08/using-your-heal.html

If you have specific questions, drop me an email.

[MIke McKee]

Lots of small businesses have SIMPLE IRAs for the owners and employees. A SIMPLE IRA is an alternative over the 401(k).

The SIMPLE IRA limits for 2009 are: $11,500, age 49 and below, and $14,000, age 50 and above.

[rwh]

I don't think SS is a joke. My aunt gets about $750/month and that's all she has to live on. So my wife and I send her money each month. If she didn't have the SS we would have to send more, which we can ill afford to do with two kids entering college in a few years.

My brother is nearly blind and is now on SS disability. It's the only money he has to live on as well, unless his kids give him money.

There are lots of people out there like that, and while we can be critical of them for not having managed their money, the fact is the SS system is the only thing keeping millions of people from living on the street.

[kitty]

1. Yep, I'll fully fund our 401(k) in 2009 as I've done for years. Provided I still have my job, of course: no immediate risk but in this economy nobody knows.

2. Don't use HSA only FSA and in FSA the amount of contribution is a balancing act between putting too little or too much.

3. Ouch! Same sentiments. For the past two years it was nice to have last three paychecks or so larger. Since any hope for a raise next year is nothing but wishful thinking, the most I'll get next year is one slightly larger paycheck.

4. Same thing. Will put 5000 in non-deductible IRA as I did last year and will probably do for this year - I am always contributing to IRA or Roth for the preceding year at the time I get all of my W-2, interest and dividend statements to see if there is any portion of this amount I can contribute to Roth. Being able to contribute to Roth is unlikely, so it'll be non-deductible IRA for 2008 and 2009 with the hope to covert to Roth in 2010.

[rc0]

We contribute the max to the following:
1) 401K
2) HSA
3) Roth IRA - we haven't contributed yet for 2008. We'll do this after tax preparation to determine how much we are qualified to contribute. We got burned when we contributed the max for 2006 then found out in 2007 that we were not qualified to give the maximum contributions. We ended up paying taxes on the overcontributed amounts :(
4) Dependent care account
5) Coverdell accounts for our 2 daughters

[JL]

FMF: I've always wondered... why do folks contribute to a non-deductible IRA? If it's post-tax money, then is it the same as just investing normally? I'm unclear about the benefits....

[FMF]

JL --

Because the investment can grow tax-deferred. And 20 or 30 years without the impact of taxes on your earnings can be HUGE!