If retirement is looming, but you have not built the nest egg you want or need for worry-free golden years, there is no need to fret. There are strategies and tactics you can employ to catch up on your retirement savings goals when you are over the age of 50. Here is a closer look at a few methods that can help make a difference for your bottom line so your retirement can be exactly what you want it to be:
Focus on and contribute to your employer benefits
If you work for a company that provides a 401(k), now is the time to take full advantage of its maximum contribution allotment. “Note that the total allowed catch-up contribution for those 50 and older is $6,500 per year for 2021 and 2022, for a total of $26,000 for 2021, and $27,000 for 2022,” reports Glenn Curtis, writer for Investopedia.com.
If you are a health care worker or a teacher, your 403(b) plan might be your way to save more for retirement when you are playing catch-up. According to Sandra Block of Kiplinger.com, this plan lets you do an extra catch-up contribution if you have worked in the respective field for 15 years. Public sector employees get the option with certain 457 plans. “The rules can be tricky. Check with the IRS or your 403(b) plan provider for details,” she warns.
Invest in your personal savings accounts
For most, a 401(k) is not the only savings tool. If you have opened up a personal IRA or Roth IRA, you can use it to play catch-up, too. Of course, every savings tool has limitations, but it can still offer a valuable resource for your retirement nest egg. “Note that the yearly contribution limits for IRA — for both traditional and Roth versions — is $6,000 for years 2021 and 2022. The catch-up contribution for those 50 years old and older is $1,000,” says Curtis.
By contributing the maximum amount possible to both your Roth IRA and 401(k), establishing them as fully funded, you will be well on your way to building up your retirement savings, he adds.
Mine your assets close to home
The equity you have built as a homeowner can be a source to mine for your retirement. Although Curtis warns against using it as your “primary source of retirement income,” it can be a source of liquidity.
Another way to bolster your retirement savings is by ridding your portfolio of debt, especially if you are still working on paying off your home’s mortgage. “By the time you’re 50 years old, one big debt hurdle you may have left to clear is your mortgage,” notes Brian Baker, writer for Bankrate.com. “Without a mortgage to pay for, you could focus on saving or investing in the stock market. Paying off your home will likely take time, but in the long run, it’s worth it.”
With catch-up contributions to your employer-backed and personal accounts, reviewing your home’s equity, and getting rid of debt so you can focus on other investment opportunities, you will be able to bolster your retirement assets in no time!