Tax Benefits for 50 Year Olds.
This year I turned a half a century old. Most people I know sort of dread this BIG “0” but for me it has been the best “0” so far! For all my baby boomer friends the most important part of getting older is being prepared financially for when we are no longer able to earn income.
Since this is a tax blog, one of the big breaks for taxpayers over 50 is the catch up contribution to our retirement plans. For your IRA plans at age 50 you can contribute an additional $1000 to the $5,000 maximum or $6000 total. For your qualified plans at work, the catch up for 2012 is $5,500 to the max contribution of $17,000 or $22,500 total.
I see many people participate to the “MATCH” of their company but you can contribute to the “MAX” allowed. I strongly recommend you participate fully in any retirement plan you have available to you. Not only are you saving for your future (and you’ll need more than you think) but you’ll pay less in taxes! You lower your taxable income by every dollar you put into your qualified retirement plans. Most of our generation is not set up for retirement. $100,000 in retirement may only last a year or two and there are only so many senior “welcome at the door” jobs available.
You can start slow, increase your contributions the most you can at least once or twice a year until you get up to the maximum contribution available. Refer to your financial advisor for more information on your individual situation.
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