In order to retire comfortably, you have to pay than ever taking advantage of all the retirement savings options available to you. With so many potential obstacles to making ends meet during your golden years, the more you can save the course of your career, the easier it will be to live the life you want after you've stopped working.
Millions of people use IRAs to help them set money aside for retirement. These tax-favored vehicles give savers a chance to get valuable tax benefits on their savings, and they come with a commission that many people don't even know about. Almost 1.5 million taxpayers took advantage of this special IRA opportunity, and if you qualify, you could join their ranks ̵
Using IRAs to catch up on your retirement goals
you can comfortably start to start setting money aside. The earlier you start investing, the more time your money will have, and the power of compounding makes an early start extremely valuable. For instance, if you start saving at age 25, your money will grow to more than double what it would if you start saving the same amount at age 35.
Yet most people have a lot of financial challenges in starting to invest for retirement early in their careers. Many young adults have a massive student loan to pay off before they can even think about beginning to invest. Competing priorities, like buying a home and starting a family, often lead to the decision to delay retirement savings. As a result, it's not uncommon for people to wait until middle age before seriously addressing the need for retirement.
are known as catch-up contributions. Each year, you're entitled to up to a certain maximum amount to an IRA. For 2019, that number is $ 6,000. However, if you're 50 years old or older, then you also become eligible to save an extra $ 1,000. This added amount is intended to help older workers catch up on their retirement savings goals – which they might have neglected earlier in their careers.
A cadre of catcher-uppers
catch-up contributions, but many do. Almost 1.35 million Americans took advantage of the catch-up to contribute the full extra $ 1,000 in the most recent year for which the IRS has made data available. Up to $ 500, plus 87,000 made at least some catch-up contribution of up to $ 500. That adds up to over 1.48 million taxpayers, and together, the amount of their catch-up contributions totaled almost $ 1.43 billion.
Moreover, it's never too late to start catching up. Contributions among those 50 and older were fairly equally split across age groups, with the number of taxpayers rising in the 55-59 cohort and keeping stable in the 60-64 cohort. Contributor counts declined back to 50-54 levels between ages 65 and 70 1/2. Contributions to traditional IRAs are currently prohibited for those older than 70 1/2 – although Roth contributions are still allowed at any age, as long as you have earned income.