To be able to retire comfortably, you have to pay as never before, taking advantage of all the retirement savings options available to you. With so many potential obstacles to make 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 stop working.
Millions of people use IRA to help them save money for retirement. These tax-favored vehicles give savers the opportunity to obtain valuable tax benefits in their savings, and they come with a commission that many people do not even know. Almost 1.5 million taxpayers took advantage of this special IRA opportunity, and if you qualify, you could join their ranks and position yourself in an even better position to have the retirement of your dreams.
Use of IRA to achieve your retirement goals
One of the most difficult aspects of saving for retirement is determining when you can start saving money comfortably. The sooner you start investing, the more time your money will have to grow, and the power of capitalization makes an early start extremely valuable. For example, if you start saving at age 25, your money will increase to more than double what you would get if you start saving the same amount at age 35.
However, most people have many financial challenges to start investing for early retirement in their careers. Many young adults have to pay a massive student loan before they can even think about starting to invest. Conflicting priorities, such as buying a home and starting a family, often lead to the decision to delay retirement savings. As a result, it is not uncommon for people to wait until middle age before seriously addressing the need to save for retirement.
It is with this fact in mind that legislators decided to include provisions in the rules governing IRAs to allow what are known as update contributions. Each year, you are entitled to a certain maximum amount for an IRA. For 2019, that number is $ 6,000. However, if you are 50 or older, you are also eligible to save an additional $ 1,000. This additional amount is intended to help older workers catch up with their retirement savings goals, which they may have neglected earlier in their careers.
A box or catchers-uppers
Not everyone takes advantage of the ability to make those update contributions, but many do. Nearly 1.35 million Americans took advantage of the update to provide the additional $ 1,000 extra in the most recent year for which the IRS has made the data available. Up to $ 500, plus 87,000 made at least some recovery contribution of up to $ 500. That adds up to more than 1.48 million taxpayers, and collectively, the amount of their update contributions amounted to almost $ 1.43 billion.
Also, it's never too late to catch up. Contributions among those over 50 years were fairly evenly divided among age groups, with the number of contributors increasing in the 55-59 cohort and remaining stable in the 60-64 cohort. Taxpayer counts decreased to 50-54 levels between the ages of 65 and 70 1/2. Contributions to traditional IRAs are currently prohibited for those with more than 70 1/2, although Roth's contributions are still allowed at any age.
Even if it's still not enough to qualify to make upgrade contributions, it's still a good idea to start saving for retirement as soon as possible. The sooner you start, the easier it will be. But do not be stressed if you've waited too long: recovery has made a big difference in helping nearly 1.5 million people get their retirement savings, and you could be one of them.