Besides getting an AARP card, one of the most important benefits of turning 50, is the opportunity to fatten your savings account and watch your retirement investments grow.
How do you do this? By taking full advantage of catch-up provisions that the US government provides for your tax-advantaged savings accounts, like IRAs and 401(k)s. These catch-up contributions can be made each year after you celebrate your 50th birthday.
Even if you’re on track with your retirement savings, tax-advantaged accounts like IRAs and 401(k)s can help you build more assets. For example, the annual catch-up amount for IRAs is $1,000 which boosts your total contribution potential to $6,500. If you participate in a 401(k) or 403 (b) or similar workplace retirement savings plan, the catch-up opportunity enables you to contribute an additional $6,000 yearly. That means you can contribute up to $24,000 per year.
These extra savings add up to more money in retirement. As you know from my prior blogs, I feel strongly investors should funnel as much money as possible into Roth accounts. It doesn’t matter whether it is a Roth IRA or a Roth 401(k), your focus should be on saving as much as you can in Roth accounts. And, you have until April 17th to make IRA contributions for calendar year 2017, so there is still time to take advantage of last year’s catch-up opportunity in your Roth IRA.
Don’t miss out on this savings opportunity – your retirement next egg may depend on it.