For me, retirement is years off but it is something I've been thinking about a lot lately. Every now and then I'll check my investments to see how I'm doing and how my nest egg has grown or shrunk, depending on the year. Like many, the bulk of my savings is in a 401(k) offered through my employer but I also have a Roth IRA (individual retirement account) that I've added to over the years. I wish I could have added more, but raising children and financing a portion of their college soaked up a lot of my discretionary income the past few decades. Anyway, like so many others, I saved what I could and I'm glad I did.
I worry about my retirement and whether or not there will be enough to last me until the end. It would also be nice to leave something behind for my children and the nonprofits I support, but that's not my primary concern. But it's not just my retirement I worry about. I also worry about other people's retirements. Whenever possible I take younger friends, relatives and co-workers aside and ask them if they've opened a Roth IRA yet for themselves. If not I spend the next five minutes attempting to convince them to do so. I'm not a personal finance professional, my expertise is nonprofit communications, but I know enough to know that everyone should have a Roth IRA as it's probably the best tax savings investment they are likely to encounter.
The beauty of the Roth is that you contribute after tax dollars and your contributions and earnings grow tax free. A better deal would be hard to find. Your future withdrawals (after age 59 ½) are also tax free. The amount you can contribute is limited every year but if you're age 50 or older there is catch up provision which allows you to contribute a bit more than younger investors.
I've encountered people in their 50s who haven't saved anything for retirement and they think it's too late to start. But that's not true. It's best to start saving for retirement when you're young, but circumstances are what they are and if that means starting later in life then that's what you should do.
If you already have a Roth IRA or if you don't and want to open one you should know how much you can contribute to your investment. Below are contribution limits based on age for the 2023 and 2024 tax years.
Roth IRA Limits - Tax Year 2023
Under 50 = $6,500
50 and up = $7,500
Roth IRA Limits - Tax Year 2024
Under 50 = $7,000
50 and up = $8,000
Anyone with earned income can contribute to a Roth IRA and you can't contribute more to a Roth IRA than you've earned. Also, high earners may be unable to make contributions to a Roth due to income limits set by the IRS.
If you're thinking of opening a Roth for the first time or contributing to one you already have, be sure to run it past your tax or financial adviser. And congrats for doing something that will benefit the future you.
Comentarios