Concerns from the economic crisis have those quickly approaching retirement wondering how to continue to grow their retirement fund in order to retire comfortably.

If you’re one of them, or are in your mid-40s, you want to start thinking in terms the catch-up provisions allowed by law for the time you reach 50, whereby you can put away another $5,500 into a 401(k), 403(b), or government 457 plan. Any of these quality for the extra money.

So whether you’re late to the funding of your retirement game or are approaching 50, there are options available where you can make up those lost years. It’s better to start right where you’re at than to think you’re too late and do nothing about it. That’s why the added incentive of $5,500 a year is allowed for those 50 or older in age.

What’s amazing about this particular provision, is it has been in place from the government since 2002, yet only about 13 percent of those eligible use it to build up their retirement nest egg. Incredible when you think of what another $5,000 a year can build up to over a decade or two.

Another valuable part of the catch-up provisions is the additional ability to put away another $1,000 to a Roth or traditional IRA, as well as another $2,500 to a Simple IRA. All of this can make a huge increase in your retirement when implemented together.

That means if you take full advantage of the catch-up provisions for the approved of retirement accounts listed above, you could put away $22,000 annually there; $6,000 a year in a Roth or traditional IRA; and $14,000 more to the Simple IRA (including $2,500 catch-up). Not bad at all.

Most people balk at this point because they wonder where they’re going to get the extra money to invest. But there are a ton of ways to cut back on expenses when you start thinking about it, and you begin at the things you’re paying for you don’t need to have.

Can you walk or ride a bike rather than pay for an expensive health-club membership? What about all the bells and whistles on a mobile phone contract? Do you really need the hundreds of channels on your cable TV contract?

You get the idea. There are tons of ways to cut back expense without completely taking away some of the enjoyment and pleasures of life. Just step back and look at them objectively and you’ll find hundreds of dollars a month available to use the catch-up provisions which allow you to put away thousands more a year into your retirement.

Once you get to that age, you’ll be glad you took the steps and a little bit of temporary sacrifice to do it.

Tags: retirement, savings

This entry was posted on Monday, December 21st, 2009 at 7:00 am and is filed under tips. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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