Playing catch-up
If you’re getting a late start or have fallen behind, there are a number of options to consider:
- Maximizing your contribution levels
- Adjusting your investment mix
- Investing outside your plan
- Taking advantage of tax incentives
- Continuing to invest once you retire
Maximizing your contribution levels
One way to save for retirement is through a structured, ongoing investment program, such as a salary-deferral plan.
By contributing the most money permitted under your plan, you increase your long-term investment potential.
Does your employer provide a match? If so, take full advantage of it. Once you’re fully vested, whatever matching contributions your employer provides are yours. But you can qualify for matching funds only if you make the required contribution.
Adjusting your investment mix
Generally speaking, based on your time frame and tolerance for volatility, you can put together an investment mix that focuses on growth while providing some measure of stability.
Another factor to keep in mind is how much you’ve already saved. If you don’t think you’ve saved enough, you could consider keeping more of your assets in growth investments. However, keep in mind that pursuing more growth generally means taking on greater risks.
Investing outside your plan
If you’ve maxed out your 401(k) contribution, open an Individual Retirement Account, or IRA. An IRA offers some of the same tax-deferred benefits as your 401(k). There are two types of IRAs: Traditional and Roth IRAs. It’s a good idea to research which one best fits your financial situation and long-term needs.
If you’re married, you and your spouse may open separate IRAs. Both of you can contribute the full amount permitted by law. With a Traditional IRA, you may be able to deduct a portion or all of your contributions from your income tax, depending on your income.
There are other tax-advantaged investment vehicles you can use to build up your retirement savings, such as annuities and municipal bonds or municipal bond funds.
Given the many options available, you may want to meet with a financial professional to put together an investment program that is designed to help you meet your investment goals.
Taking advantage of tax incentives
Now you can contribute more to your retirement plans than ever before.
Salary deferral retirement plans
- In 2017, your plan may allow you to contribute up to $18,000 to your 401(k), 403(b) or 457 account.
- If you’re 50 or older, you can add an extra $6,000 to your company retirement plan beyond the general contribution limit for 2017.
| Year | Contribution limit (under age 50) | Catch-up contribution limit (age 50 and over) |
|---|---|---|
| 2017 | $18,000 | $6,000 |
Check with your employer about specific contribution limits for your plan. Contribution limits are adjusted for inflation in $500 increments. If your 401(k) or 403(b) plan accepts Roth contributions, limits apply whether contributions are pretax, Roth after-tax, or a combination of both.
- If your employer offers a SIMPLE IRA, you can defer up to $12,500 in 2017. If you’re 50 or older, you can add an extra $3,000.
| Year | Contribution limit (under age 50) | Catch-up contribution limit (age 50 and over) |
|---|---|---|
| 2017 | $12,500 | $15,500 |
Check with your employer about specific contribution limits for your plan. Contribution limits are adjusted for inflation in $500 increments.
IRAs
- You can contribute up to $5,500 to your IRA for 2017.
- IRA owners who are 50 or older can contribute an additional $1,000 a year above the general limit in 2017.
| Year | Contribution limit (under age 50) | Catch-up contribution limit (age 50 and over) |
|---|---|---|
| 2017 | $5,500 | $6,500 |
Contribution limits are adjusted for inflation in $500 increments.
Continuing to invest once you retire
Even the money you take as your minimum distribution can earn money if you don’t use all of it for living expenses.
You can invest a portion or all of your yearly distribution in a regular taxable investment if you want to keep your money working for you.
Keep in mind that a program of regular investing doesn’t guarantee a profit or protect against a loss. You should consider your willingness to keep investing even when share prices are declining. Contact your financial professional or tax attorney to help you build a strategy.
Return to topInvestments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.
Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in fund prospectuses, summary prospectuses and similar documents available from your plan’s financial professional or after logging in to your account, going to Investments and clicking on Investment options. Read this information carefully before investing.