4. Open an IRA
Consider establishing an individual retirement account (IRA) to help build your nest egg. You have two options: Learn about our Traditional IRA may be right for you depending on your income and whether you and/or your spouse have a workplace retirement plan. Contributions to a Traditional IRA may be tax-deductible (see Learn about potential tax deductibility for any contributions you make to a Traditional IRA) and the investment earnings have the opportunity to grow tax-deferred until you make withdrawals during retirement. If you meet the income eligibility requirements, Learn about our Roth IRAs may be a good choice for you.Footnote 2 They are funded with after-tax contributions, so once you have turned age 59½, qualified withdrawals, including earnings, are federal-tax-free (and may be state-tax-free) if you’ve held the account for at least five years. To determine what type of IRA would work best for you, go to Use our selector tool to Find out which IRA may be right for you and also check the Contribution Limits chart, below.
5. Take advantage of 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.Footnote 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.