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Catch-up contributions may boost retirement income 2010-04-27 Employees nearing retirement age are focused on maximizing their retirement income and rightly so. The recession has shown Americans how quickly hard-earned savings can disappear in the event of an economic crisis or financial emergency. In 2001, the Internal Revenue Service established a plan that allows individuals over the age of 50 to allocate more than the maximum contribution to their Roth IRA or 401(k) plan. The "catch-up" contribution program would allow an individual, whose contribution limit for a traditional 401(k) is $16,500, to contribute an additional $5,500 for a maximum deferral of $22,000, according to the IRS. The 2010 contribution limit for a traditional Roth IRA was $5,000 and the catch-up amount was $1,000, allowing for a maximum contribution of $6,000, Money Wise reports. Finding the extra money to invest in a catch-up contribution may be the most difficult aspect of participating in this plan. However, there are a number of ways that individuals can earn extra income. Getting a part-time job, working overtime, or eliminating unnecessary expenses, such as pricy dinners and daily trips to the coffee shop, may build extra income, reports Money Wise. Budgeting early and taking advantage of contribution programs can significantly increase retirement income.  |
