The Internal Revenue Service announced the employee contribution limit for 401(k) and similar workplace retirement plans are increasing by $500 to a total of $19,000 next year, up from the previous limit of $18,500. While that may not sound like much, the additional money can grow substantially over time, financial advisers say.

 

With 401(k) plans, workers save and invest part of their paycheck before taxes are taken out. The money is not taxed until it is withdrawn from the account.

 

Workers who are 50 or older also can make an extra $6,000 in "catch-up" contributions, an amount that is not changing for 2019. That means an older employee can contribute as much as $25,000 next year.

 

So, as you weigh your open-enrollment benefit decisions for 2019, you may want to increase your payroll contributions to your 401(k). By investing that extra $500 annually over 30 years, with a 7 percent average annual rate of return, it would yield about $47,000 in retirement savings.

 

In general, advisers suggest contributing at least enough to receive your employer's matching contribution. Many companies match payroll deductions — often 3, 4 or even 5 percent of your pay — to encourage workers to participate.

 

If you can afford to, increasing your contributions by one percentage point each year — say, from 5 percent of your salary to 6 percent — can make a big difference in the long run. The key is to start as early as possible and take advantage of compounding and time. The earlier you do it, the less you have to put away.

 

If your employer does not offer a retirement plan, you can open an individual retirement account. Contribution limits to I.R.A.s are also increasing next year, for the first time in five years. For 2019, you can contribute up to $6,000, an increase of $500. People 50 and older can save an extra $1,000, for a total of $7,000.