The Secret to Crushing Your Roth IRA Retirement Savings Goals | Smart Change: Personal Finance | #retirement | #elderly | #seniors
Maximize your contribution potential
Typically, a retirement saver under 50 could allocate $500 a month toward a Roth IRA and hit the $6,000 mark in 12 months.
However, if you’re 50 or older, and you’ve used that $500 a month contribution rate for a year, you may still be able to maximize your contributions to that $7,000 level. That’s because savers can continue to make prior-year Roth IRA contributions right up until the tax filing deadline. So if you made a $500 contribution every month from January through December and added additional $500 contributions in January and February, you could assign them retroactively to the prior year, and hit your $7,000 maximum annual contribution goal.
But there’s a catch to all of this: You can never contribute more to an IRA than your earned income for the year. So if you only made $4,000 in a given year, you’ll be limited to a $4,000 contribution to your Roth IRA.
Keep tabs on your money
Achieving your financial goals boil down to two numbers: income and expenses. If you need to increase your income, jot down different ways to make that happen. You can ask for a raise at work, seek out more rewarding opportunities, or teach others what you know. But be careful: If you earn too much money, you won’t be eligible to make direct contributions to a Roth IRA. At that point, you may find other strategies more beneficial. You may also want to consider a backdoor Roth IRA.