IRA Contributions: Cutting Costs & the Benefits of Extra Deposits
Opening an IRA account is an ideal way to start your retirement savings, but it is only beneficial if you actually contribute to the account on an annual basis. Individuals living on a tight budget may find it difficult to contribute to an account and watch it grow properly. If you find yourself in this situation, this guide can help you find ways to contribute more to your account and watch the retirement savings add up. These methods include a combination of budgeting tips and available features found in a variety of IRA accounts. By using bank comparison tools, you can find an IRA account that fits your personal needs and accommodates your budgetary restrictions.
Holiday & Birthday Limits
Some of the biggest annual expenses come in the form of birthday and holiday spending. After all, it’s easy to let spending get out of control as you shower your friends and family with holiday gifts. You can transfer some of that money into your IRA account by setting up spending limits. For example, you can set a Christmas gift spending limit of $500. If you typically spend around $1,000 at Christmas, you can use that extra $500 to contribute to the IRA.
On your own birthday, you may be tempted to buy yourself a large gift or enjoy a lavish dinner. Rather than spending the money on a momentary extravagance, why not give yourself a real gift and transfer the money into your IRA account? By the time your 60th birthday rolls around, you will be happy to see how much the savings have grown.
Vehicle expenses can really take a toll on your bank account. Think about the money you spend every year on gasoline, maintenance, and car insurance. If you have the option, you can save a tremendous amount of money by getting rid of one vehicle and sharing a car. If you have a spouse or partner, you may already have access to a second vehicle. If you are single, you can carpool or use public transportation to free up extra savings. This money can go a long way toward building your IRA savings as well as other investments.
As you deposit into an IRA account, you have the option of applying it to the stock market, mutual bonds, or other savings accounts. When you do this, you don’t want excess fees and charges to eat into your savings. Make sure to carefully compare different IRA account companies and see which ones offer commission-free options. A commission-free trade allows you to move and transfer money without losing any of it. This in turn allows you to build your account more quickly and reach your savings goals with less personal investment on your part.
Paid holidays and bonuses can make excellent supplements to your income. Instead of looking at that bonus as extra money, you should consider it an extra deposit into your IRA account. Even if you don’t invest the full amount into your IRA account, you’ll still be benefiting immensely over the long run.
As you near retirement, you will have the option of adding even more money to your IRA accounts. Currently, anyone under the age of 50 can contribute up to $5,500 per year into an IRA account. Once you pass the age of 50, you can start making “catch-up contributions.” This typically allows for a $1,000 extension, giving you a total contribution limit of $6,500 to put into your accounts.
When this opportunity is afforded to you, you should take advantage of it and maximize your retirement savings. Cutting extra expenses and limiting your spending can go a long way toward helping you retire early and have plenty of money to live off of. Adding just an extra $20 a week to your IRA account can help you reach the extra $1,000 for each year.
Check out all types of IRA accounts to choose the most ideal option for your retirement!