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Posted by maureen
August 31, 2007 |
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Are you a baby boomer fast approaching retirement age but worried because you haven’t saved enough for retirement? Well you’re not alone because more than two-thirds Americans of U.S. workers say they and their spouses have saved less than $50,000 toward retirement. There’s no time like the present to take stock and take a good look at some smart strategies for catching up on your retirement savings.
Contribute the max to your 401(k)
Retirement savings accounts such as 401(k)s and IRAs allow you to sock your hard-earned money away on a tax-deferred basis. In a 401(k), employers will typically match your contribution, too. Make sure to contribute as much as you can to these accounts—at least up to the company match in your 401(k). Workers age 50 or older can invest up to $20,500 this year - that’s a maximum contribution of $15,000, plus a so -called “catch-up’ of up to $5,000
Add money to your IRA
Those who are 50 or older can contribute up to $5,000 a year to a traditional or Roth IRA. If you have enough time before you have to start making withdrawals, a Roth IRA is probably the better option.
Consider working longer.
Working longer will give you more time to save for retirement, which is important if you got a late start. And it could make a big difference in the amount of Social Security benefits you receive. Social Security benefits are based on the 35 years of your highest earnings.
Get Your Debt under Control
Easier said than done I know but making some hard choices can pay dividends. Start by avoiding adding new debt in the years leading up to retirements and step up repayment of existing loans. Start with your high-rate credit cards, and then move on to car loans and 401(k) loans, if you have them. It’s also a smart move to start paying off your home-equity line of credit, paring that balance will free up more of your home’s value as a resource you can tap later in retirement if needed. Making extra payments on your home mortgage to retire the loan ahead of schedule makes sense only if you can do so while also still building your savings.
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