Home Guides & Resources chevron_right Retirement Planning in Your 50s: Catch-Up Contributions May 9, 2022 Turning 50 is momentous for so many reasons—including the extra boost it can provide to your retirement savings. The IRS limits how much you can contribute to tax-advantaged retirement accounts each year. In 2022, that limit is $6,000 to individual retirement accountsA type of account in which funds can be saved and invested without being subject to tax until the account holder reaches retirement age. (IRAs) and $20,500 to 401(k)s and other workplace retirement plans like 403(b)s and Thrift Savings Plans. At Adviser Investments, we encourage all clients to make consistent contributions to these accounts every year. But the truth is many people don’t even come close to maxing out their retirement account contributions—especially in their younger years. And that can leave them lagging where they need to be as retirement approaches. That’s why the big 5-0 is such an important milestone: It’s when the IRS lets you start playing catch-up. For most people, the 50s represent peak earning years. Making catch-up contributions to retirement accounts can help compensate for any deficit in your savings while still giving your investments a decade or more to compound. If you have the cash flow to max out your retirement accounts in your 50s and to make catch-up contributions on top of that, we highly recommend it. In 2022, anyone over 50 can contribute an additional $1,000 to an IRAA type of account in which funds can be saved and invested without being subject to tax until the account holder reaches retirement age. and an additional $6,500 to workplace retirement plans. One rule of thumb is to aim to put 10%–15% of your salary toward retirement at this stage in your life. That said, don’t be overly concerned about hitting an arbitrary threshold. We advise our clients to save as much as they are reasonably able. Higher earners should note that phaseout and upper income limits may make you ineligible to take full advantage of a traditional IRA’s tax deduction or to contribute to a Roth IRA. Check out Page 2 of our Key Financial & Tax Planning reference to see if you run into those limits. If you have questions about how much you should be contributing to your retirement accounts and whether you are on track for retirement, please contact your wealth management team. We’re happy to help. This material is distributed for informational purposes only. The investment ideas and opinions contained herein should not be viewed as recommendations or personal investment advice or considered an offer to buy or sell specific securities. Data and statistics contained in this report are obtained from what we believe to be reliable sources; however, their accuracy, completeness or reliability cannot be guaranteed. Our statements and opinions are subject to change without notice and should be considered only as part of a diversified portfolio. You may request a free copy of the firm’s Form ADV Part 2, which describes, among other items, risk factors, strategies, affiliations, services offered and fees charged. Past performance is not an indication of future returns. Tax, legal and insurance information contained herein is general in nature, is provided for informational purposes only, and should not be construed as legal or tax advice, or as advice on whether to buy or surrender any insurance products. Personalized tax advice and tax return preparation is available through a separate, written engagement agreement with Adviser Investments Tax Solutions. We do not provide legal advice, nor sell insurance products. Always consult a licensed attorney, tax professional or licensed insurance professional regarding your specific legal or tax situation, or insurance needs. Companies mentioned in this article are not necessarily held in client portfolios and our references to them should not be viewed as a recommendation to buy, sell or hold any of them. © 2022 Adviser Investments, LLC. All Rights Reserved.