Benefits Of Allowable Deductions
People over 40 have the misconception that it’s too late for them to start saving for retirement. While having only 15+ left to save a nest egg seems daunting, there are some accelerated retirement tactics that can help you earn as much money as quickly as possible.
401(K) to the Max - How powerful is a 401(K)? According to an Investopedia article, a 401(k) can provide you with a more savings that you’d expect. For example, if you’re 40 years old and donate $17,500 to a 401(k) yearly, with an 8% return (with no employer contribution) could reap over $1.3 million in savings by age 65. The same person at age 50 can garner nearly $300,000 more with a catch-up amount of $5,500.
If you think you can’t spare fully funding your 401(K) every …show more content…
In fact, if you have a large amount of mortgage interest, deductible taxes, business-related expenses that weren't reimbursed by your company, and/or charitable donations, it probably makes sense to itemize your deductions.
Sit down with a CPA and go over your personal situation to determine whether it makes sense to itemize. Then get in the habit of saving receipts and keeping good records. Remember, in the end it's not always what you make, but what you save that counts - particularly as you get closer to retirement.
Catch-up using catch-up contributions if you are age 50 or older - One of the reasons it's important to start saving early if you can is that yearly contributions to IRAs and
401(k) plans are limited. The good news? Once you reach age 50, you’re eligible to go beyond the normal limits with catch-up contributions to IRAs and 401(k)s.3 So if over the years, you haven't been able to save as much as you would have liked, catch-up contributions can help boost your retirement savings. Take a look at the chart, below, for contribution limits for individuals over the age of 50.
Aim to increase your retirement contributions up to the maximum allowed in your 401(k), IRA or other retirement
401(K) to the Max - How powerful is a 401(K)? According to an Investopedia article, a 401(k) can provide you with a more savings that you’d expect. For example, if you’re 40 years old and donate $17,500 to a 401(k) yearly, with an 8% return (with no employer contribution) could reap over $1.3 million in savings by age 65. The same person at age 50 can garner nearly $300,000 more with a catch-up amount of $5,500.
If you think you can’t spare fully funding your 401(K) every …show more content…
In fact, if you have a large amount of mortgage interest, deductible taxes, business-related expenses that weren't reimbursed by your company, and/or charitable donations, it probably makes sense to itemize your deductions.
Sit down with a CPA and go over your personal situation to determine whether it makes sense to itemize. Then get in the habit of saving receipts and keeping good records. Remember, in the end it's not always what you make, but what you save that counts - particularly as you get closer to retirement.
Catch-up using catch-up contributions if you are age 50 or older - One of the reasons it's important to start saving early if you can is that yearly contributions to IRAs and
401(k) plans are limited. The good news? Once you reach age 50, you’re eligible to go beyond the normal limits with catch-up contributions to IRAs and 401(k)s.3 So if over the years, you haven't been able to save as much as you would have liked, catch-up contributions can help boost your retirement savings. Take a look at the chart, below, for contribution limits for individuals over the age of 50.
Aim to increase your retirement contributions up to the maximum allowed in your 401(k), IRA or other retirement