Whether you're turning 50 years old or already celebrated that birthday, the government has a gift for your retirement fund!
Welcome to the age of catch-up contributions!
If you are 50 or older, you are eligible to put extra money into your retirement accounts, like your 401(k) or IRA, going over the standard annual limit set by the IRS. In other words, if you're getting close to retirement, you can put extra money into savings to help your "catch up" on retirement savings.
Investing just $1,000 at age 50 could result in $2,000 to $4,000 in savings by the time you hit 65 years old. If you put in more than just an extra $1,000, it could make a real difference!
There are a few rules and things to know, but it can be a good way to supercharge your retirement lifestyle.
Even though you can exceed the standard IRS limits, there are still limits! These limits change with your age. For example, if you are between the ages of 50 to 59, you can put an additional $8,000 per year into your work-associated retirement plan. From ages 60 to 63, you can put an additional $11,250 into that account under new laws. Starting at age 50, you can also put an additional $1,100 into your IRA.
However, these limits are a little bit different if you have a Roth plan or a SIMPLE 401(k). It's best to check with a financial adviser before you start making catch-up contributions to ensure you're following the rules for your particular plan and age.
As always, the best time to start saving for retirement was the day you got your first job, but the second best time to start saving is today. Catch-up contributions can help you live an easier lifestyle when you decide to stop working.
If you are ever in need of guidance, we're happy to help! All you have to do is call, contact us through online banking or stop by a branch and we can help you make an appointment with a financial professional who can help! We're here for you, for life and for all of life's stages.
We'd love to help you reach the retirement you want and deserve after years of working. See you soon!