By Cindy Cabbage
It’s easy to look back to the past and wish that you had started saving for retirement sooner than you did. But you can’t go back to the past, right? While you can’t literally go back and make contributions to your individual retirement account (IRA), there is a way to make up for the past today.
Special Provision for Those Close to Retirement Age
As employees get nearer to the retirement age, retirement savings become more and more important. Provisions are in place to allow those who are getting close to retirement to make larger contributions to their individual retirement accounts. Contributions to an IRA are typically limited to $5,500. However, if you are 50 years or older, you may contribute an extra $1,000 each year. Additionally, those that contribute to workplace retirement plans, such as 401(k) and 403(b) plans, can also contribute an extra $6,000 at age 50 or older. This is in addition to the allowable amount of $18,000 in 2017.
Why It Is Important to Catch Up
Everyone is probably aware that saving for retirement is important. With longer life expectancy and greater retirement expectations, the amount that retirees need to have saved is increasing all the time. We all want to have enough money to live comfortably throughout retirement. Yet many people find it difficult to save the maximum amount allowed each year. Making catch-up contributions gives everyone a chance to make up for lost time.
Enjoy the Tax Benefits Now
In addition, contributions to traditional IRAs are tax deductible, and all IRAs are allowed to grow without being taxed until funds are withdrawn. Catch-up contributions to traditional IRAs may also mean that your tax bill will be smaller. So in addition to having more money in retirement, you might even have a little more cash right now.
If you haven’t invested as much in your retirement as you think you should have, now is the time to catch up. Remember though that IRA contributions for 2017 must be made by April 17, 2018. Talk with us today about how you can get caught up on your retirement savings.
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