No matter your age, the right time to start planning for retirement, if you haven’t already, is now. However, for some people who are in their 50s, retirement planning can be a source of stress. And there is this idea that it is too late to start now. This is false. There are plenty of options, from the reverse mortgage to aggressive investing, that can help you. And the government offers some helpful resources that can allow you to play catch-up with your retirement plan.
Catch up contributions for your retirement plan
Retirement plan options with tax-favored status come with contribution limits. Starting this tax year, that limit is $15,500 for the 401(k) and $4,000 for the IRA. But if you are over the age of 50, those limits increase. This is meant to help you more effectively save money in your retirement plan, and help you “catch up” by giving you greater opportunities to get your money to work for you.
Here are the additional amounts you can use as catch up contributions for your retirement plan:
- 401(k): $5,000 (for a total limit of $20,500)
- IRA: $1,000 (for a total limit of $5,000)
With some careful planning, you can make your retirement better. Just remember to add catch up contributions to the mix if you are over 50.