Catch-up contributions can help those over 50
John and Linda didn’t have a lot of money to set aside while paying the mortgage and raising a family. Now that their kids are grown and the house is paid off, they’re concerned they may not have saved enough to retire in 10 years.
Estimating how much money you’ll need in retirement – and figuring out how to save it – can be complex and confusing. Fewer than half of Americans know how much they should be saving, according to the LIMRA Secure Retirement Institute.
Most workers are saving too little or nothing at all. Though LIMRA recommends saving a minimum of 10 percent of your income annually, four out of five workers are saving less. The average rate of saving is only 6 percent, LIMRA reports, leaving almost a third of pre-retirees (workers ages 55-70) with less than $100,000 for retirement. More than a third have less than $25,000.
If you’ve fallen behind, catch-up contributions may help you get your retirement saving back on track. Provisions in the IRS tax code allow people over age 50 to set aside extra money each year in certain savings plans – including 401(k) accounts – on top of normal contribution limits.
A Modern Woodmen financial representative can help you determine how much money you’ll need for a comfortable retirement and whether you’re saving at a rate to meet your needs.
It’s never too late to start saving. The key is to set goals and follow a plan to achieve them.
Let’s start the conversation.
Jonathan Nelson, FIC
Registered representative. Securities offered through MWA Financial Services Inc., a wholly owned subsidiary of Modern Woodmen of America. Member: FINRA, SIPC.