If you are like most women, you won’t have enough money for retirement. In fact, 63% of women have no retirement savings and expect to be relying on Social Security as their primary source of retirement income, according to a 2015 Transamerica Center for Retirement Studies report.
Additionally, as a woman you will most likely need more retirement savings than a man, as women tend to outlive men by almost 5 years according to the 2013 and 2014 National Vital Statistics System, and a 65-year-old woman will pay $21,578 more for health care than will a man of the same age (Health View Services).
Catch Up Limits Let Your Accelerate Your Fund After 50
But don’t lose hope, not only are there some exciting opportunities available to women today such as “Un-retirement” that weren’t a viable option in the past, but there are a number of ways for you to catchup that are only open to Americans fifty and over. With most of the women in our country without a nest-egg, the government has included some options to help you to accelerate your savings in the final push to retirement. These include increased contribution limits for your 401(k), IRA, and Health Savings Account.
401(k) and IRA
Once you’re 50 or over, you can contribute thousands more to your 401(k) plan than younger people. Catchup contribution limits increase from $6,000 to a whooping $24,000. You can also make a $1,000 catch-up contribution to an IRA, for a total contribution of $6,500 in 2016. Unlike with a traditional IRA, you don’t have to take annual minimum withdrawals from a Roth once you turn 70 1/2. There are, however, income limits on Roth contributions. You’re eligible if your modified adjusted gross income is less than $125,000 ($183,000 if you’re married and file jointly).
Additionally, you are allowed to make additional contributions to your Health Savings Account (HSA) if you are age 55 or older by the end of the year. Fidelity Investments estimates that the average 65-year-old couple will spend $240,000 on health care in retirement. A HSA can help you to pay for the rising cost of medical expenses through a tax deferred savings program. You can contribute an additional $1,000 to your HSA. If you are married, and both of you are age 55, each of you can contribute an additional $1,000.
Health Savings Account (HSA)
Note that you can only contribute to an HSA if you have a High Deductible Health Plan (HDHP) along with other qualifying criteria. For 2017, an HDHP with individual coverage must have at least $1,300 in annual deductible and no more than $6,550 in annual out-of-pocket expenses. For family coverage, the numbers are minimum $2,600 in annual deductible and no more than $13,100 in annual out-of-pocket expenses.
These opportunities to make additional tax deferred contributions in the final push to retirement can make a huge difference in your ability to meet your financial needs during retirement when you include the power of compounding, even in only a 10 to 15-year time period. We often are made to feel that if we didn’t start a retirement savings back in our twenties or thirties then we are just screwed, but that’s not the case. The following are just a few examples on how your retirement savings can grow in a short period of time.
But you may be saying, “That’s great but I don’t have the extra money to put into a retirement account!”.
And I hear you…
So that’s why our next post will be about the other opportunities you have to meet your retirement goals, no matter what your age and even if you don’t have extra money right now.
So don’t miss our next post.
If you’d like to learn all 10+ Retirement Strategies Just for Boomer Women right now, you can download your FREE report by clicking on the “Yes” button above and get instant access.