Can the New 2023 401(k) Limits Make You a Fortune?

As awful as 2022’s inflation has been to all of our abilities to cover our costs, it did bring with it one big benefit for those of us trying to save for our retirements. Thanks to an automatic inflation adjustment, 401(k) contribution limits are rising by a record amount for 2023. The general limit for people under age 50 increases by $2,000 to $22,500. Those aged 50 and up can potentially contribute as much as $30,000 to their 401(k) plans for 2023, thanks to a $7,500 catch-up amount, a catch-up increase of $1,000.

Whether or not you’ve passed your 50th birthday, if you’ve got a 401(k) available to you, it probably offers you a substantial opportunity to sock away money for your future. Indeed, the limits on 401(k) contributions are generous enough that it raises a key question: Can the new 2023 401(k) limits make you a fortune?

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They might, if you put them to use

Of course, no matter how generous a contribution limit is, it only does you any good if you’re able to put it to use for yourself. The two following tables show what might be possible, assuming you start from $0 and are able to max out your 401(k) contribution each year with regular monthly deposits. The first table shows the potential for people under age 50, while the second table shows the potential for those 50 and up. Because future returns are never guaranteed, both tables use a range of possible outcomes.

Years to Go

10% Annual Returns

8% Annual Returns

6% Annual Returns

4% Annual Returns









































Data source: author.

Years to Go

10% Annual Returns

8% Annual Returns

6% Annual Returns

4% Annual Returns





















Data source: author.

If you start very early in your career and invest aggressively throughout it, the new 401(k) limits could indeed help you reach an eye-poppingly huge net worth. If the market delivers about in line with its long-run historical return rates near 10%, there’s even a chance for an eight-figure net worth from your 401(k) alone.

For those starting to save later in their careers, however, the story is a bit different. The good news is that, yes, the extra catch-up contribution amounts can help you build a bigger account balance than you would have reached without them. The bad news is that with less time for compounding to work its magic on your behalf, your account balances will be unlikely to reach quite the same heights as those who start earlier.

Even if you can’t max out your 401(k), get started now

Of course, going from $0 to $22,500 or $30,000 per year in investing is easier said than done, especially with the inflation we’re facing these days. The good news is that you don’t have to contribute the absolute maximum to your 401(k) to start building your nest egg. Any contribution you make can help, and if you get a match, socking away enough to maximize that match is a great first target to reach for.

Regardless of how much you are able to sock away, if the preceding tables show you anything, it’s just how important time is to your ability to build a decent nest egg for your retirement. The sooner you get started, the more time you’ll have for compounding to work its magic on your behalf. So take advantage of the New Year and make today the day you raise your 401(k) contribution to get closer to that new maximum.

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Chuck Saletta has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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