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Behind on your retirement saving? Catching up when you're over 50

October 19, 2010

by Rick Disharoon | MoneyRates Guest Contributor

 

This article is part of a MoneyRates.com series, 10 steps to a comfortable retirement.

Most of us saving for retirement over the last decade feel as if we have gone backwards in our pursuit of saving for the end goal. Well, there is no better time than now to focus on the opportunity of catching up to your goal. Americans who are focused on retirement accumulation goals and are over the age of 50 have some unique opportunities in the limits that they can defer to retirement accounts.

Increase your deferral to catch up on retirement savings

Investors over age 50 who are participating in an employer-sponsored 401(k) plan have the ability to save an additional $5,500 in 2010, making the total allowable income deferral $22,000. Many employers today offer SIMPLE IRA plans instead of 401(k) plans, and there is an increased deferral amount for these participants as well. SIMPLE IRA participants over age 50 can defer an additional $2,500, making the total deferral amount $14,000.

These increased deferral amounts can offer a huge advantage to those who are behind in retirement savings. The additional deferral of income can also help with lowering income taxes due for this year.

If you do not have an employer-sponsored retirement plan available, then consider the increased deferral amount in a traditional IRA. Investors over age 50 can save an additional $1,000 in 2010, making the total allowable contribution $6,000. Please make sure to check with your tax advisor to see if your contribution can be tax-deductible.

The increased deferral amounts for Americans over age 50 allow investors to not only accumulate more money, but also save on income taxes for the year. The combined effect of reducing taxes and accumulating more dollars for retirement will surely be a great way to jump-start your goals for retirement and catch up!

Read more financial advice from our series, 10 steps to a comfortable retirement.

 

About the Author:

Rick Disharoon has earned the CFP® designation and specializes in helping clients with their overall investment management. This involves a deep understanding of a client's goals, objectives and tolerances. Disharoon is a principal in the firm Slate, Disharoon, Parrish & Associates, LLC in Knoxville, Tenn.

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