Are you afraid you haven’t saved enough for retirement? If you’re 50 or older, the tax code gives you lots of incentives to make up for lost time.
Start with your individual retirement account. This year, anyone 50 or older can add an extra $1,000 to their Roth IRA or traditional IRA, for a total contribution of $6,500. You don’t have to wait until your actual birthday to make the additional $1,000 contribution. You can do it any time during the year you turn 50.
If you have an employer-sponsored retirement plan, such as a 401(k), you can save even more. Workers 50 and older can add an extra $5,500 to their plan this year, for a total 2014 contribution of $23,000.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Some plans allow additional catch-up contributions. For example, 457 plans, which are retirement plans for public sector employees, offer a pre-retirement catch-up option that permits workers to sock away up to double the maximum contribution per year for three years before their normal retirement date. That would work out to a pre-retirement catch-up contribution of $35,000 in 2014. Some public sector workers take advantage of this feature to invest a large payout from unused sick leave or vacation days in their retirement plan. Just keep in mind that you can’t use both the age-50 catch-up contribution and the pre-retirement catch-up in the same year.
Some 403(b) plans, which are often offered to teachers and health care employees, allow workers with 15 years of service to make an extra catch-up contribution. The rules can be tricky. Check with the IRS or your 403(b) plan provider for details.
Use our Retirement Savings Calculator to figure out how much you will need to save now to enjoy life later, and check out our Retiree Tax Map to see which states are the most tax friendly and least tax friendly toward retirees.
-
What the Comcast Cable Spinoff Means for InvestorsComcast has announced plans to spin off select cable networks and digital assets into a separate publicly traded company. Here's what you need to know.
-
TJX Stock: Wall Street Stays Bullish After EarningsTJX stock is trading lower Wednesday despite the TJ Maxx owner's beat-and-raise quarter, but analysts aren't worried. Here's why.
-
457 Plan Contribution Limits for 2025Retirement plans There are higher 457 plan contribution limits for state and local government workers in 2025 than in 2024.
-
457 Contribution Limits for 2024
retirement plans State and local government workers can contribute more to their 457 plans in 2024 than in 2023.
-
Should You Rent in Retirement?Making Your Money Last Renting isn't right for all retirees, but it does offer flexibility and it frees up cash.
-
Catch-Up Contributions to Retirement Accounts Boosted By SECURE Act 2.0Americans approaching retirement age can now squirrel away more money in IRAs, 401(k)s, and other retirement accounts.
-
Getting Ready for Retirement? We Explain Key Elements and OptionsRetirement savings are just one component of your financial profile once you hit your golden years.
-
Save More for Retirement in 2023 Thanks to Higher IRA and 401(k) Contribution LimitsIf you're saving for retirement, you can contribute a lot more to an IRA, 401(k), or other retirement account in 2023.
-
401(k) Contribution Deadline Coming SoonYear-end is the common deadline for making max 401(k) contributions that can increase your savings for retirement and help lower your tax bill.
-
IRAs vs. 401(k)s: Exceptions to 10% Penalty for Withdrawals Under Age 59½ DifferIRAs Before pulling money out of retirement accounts early, check the rules. The exceptions to penalties can differ depending on which type of account you’ve got.
