10 Years to Retirement: Ways to Boost Your IRA in the Final Decade of Working
When many people turn 50, they begin the long but rewarding 10-year countdown to retirement. One way to boost your retirement fund is by opening an IRA account. Comparing accounts and seeing different bank offerings can help you understand your options for saving money and building a proper retirement that you can live off of. Instead of slacking for those last 10 working years, you can really make them count. Boosting an IRA account with extra money can allow you to retire comfortably.
One of the biggest advantages of turning 50 is having the ability to deposit increased amounts into your IRA. Special provisions are allowed for IRAs that dramatically increase the maximum contributions allowed to your account. The total limit increase is typically topped at $1,000 for both traditional and Roth IRA accounts.
This means that if the limits stand at $5,500 annually, your catch-up maximum would total $6,500. In the 10 years before you retire, you will have the ability to add in an extra $10,000 worth of savings. Even if you open the account at the age of 50, you can still take advantage of these limits. That’s why it’s great to compare different banks and explore the best options for the 10-year period.
Senior Discount Savings
Adding the extra thousand into an IRA account may not be achievable with the current budget that you’re on. Changing your budget and separating the proper funds can make a huge difference in your ability to save and contribute enough into an IRA. Once you turn 50, extra savings can be achieved through the access of several senior discount opportunities.
A number of restaurants, grocery chains, and stores offer senior discounts to their customers. These discounts allow you to save money to contribute to your IRA. For example, if you spend $200 on a weekly grocery trip, a new senior discount could save you 10%. That would equal savings of $20 a week, $80 a month, and $1,040 a year. Just those savings alone would be enough to reach the extra amount needed for the catch-up limit.
Empty Nest Savings
A parent is most likely to become an empty-nester between the ages of 40 and 70. If all of your children and grandchildren have moved out of the home, you may be able to contribute more to an IRA account. The biggest savings can come from downgrading your home. You can move into a smaller house and use the profits from a larger home to add contributions to your IRA account. If you’ve made $30,000 on the sale of the home, that amount can be split up over five to six years and used as contributions to your account.
Other savings come in the form of groceries and utility bills. Fewer people in the house will lead to increased savings all around. Simple budgeting that can cut out extra costs will help build up the savings and lead you to a happy retirement.
Roth IRA Options
There is yet another way to boost your retirement savings. When choosing an IRA account, you have the ability to select a Roth IRA. One of the biggest distinguishing features of a Roth IRA has to do with tax payments. As you make contributions to your Roth IRA, they will be taxed at the time of the contribution. This means that when you reach your retirement age in 10 years, you will not have to pay any taxes to withdraw the money from your various accounts. All the money in your account is yours to keep.
Another advantage that comes with Roth IRA accounts is the ability to spread out your withdrawals. With a traditional IRA, you must take out a minimum payment by the time you turn 70 in most cases. Roth IRA accounts allow you to take out money as you need it. This allows you to earn extra money and grow the accounts even as you enjoy your retirement. For example, you may withdraw 20% of your Roth IRA when you reach 60 years old. By using that money, you can wait an extra five years and then take out another 20% when you turn 65. This will give you more money options and allow you to have a much larger amount to live off of.
Want to learn more about opening an IRA account? Compare some of the best accounts that are available.