NEW YORK (MainStreet) — Back in March, we pointed to a Charles Schwab
Confirmation comes from TD Ameritrade
According to the Omaha, Neb., investment firm, baby boomers have saved $275,000 on average for their post-employment years, but estimate they’ll need $750,000 “to live comfortably.”
As a result, boomers need to start playing “catch up” right away via individual retirement accounts. Such plans allow Americans over the age of 50 to make “extra” contributions to their IRA or to their 401(k) plans at work – the contributions are above and beyond the contributions Americans can legally make on an annual basis to their retirement plans on a tax-advantaged basis.
Consumers have until April 15 to make catch-up contributions to their retirement portfolios.TD Ameritrade breaks down the maximum account limits as follows:
- IRA contribution limits are $5,000 with an additional $1,000 catch-up contribution, for a total contribution of $6,000.
- 401(k) contribution limits are $17,500 with an additional $5,500 catch-up contribution, for a total contribution of $23,000.
- IRA contribution limits are $5,500 with an additional $1,000 catch-up contribution, for a total contribution of $6,500.
If you can’t manage a catch-up contribution for 2012, start off 2013 by stashing your tax refund check into an IRA or a 401(k) plan. Chances are decent you’ll get a tax refund, as TD Ameritrade estimates that 47% of Americans will get a check or automatic tax deposit from Uncle Sam this year.
The key is not spending the money, but redirecting it immediately to their retirement plans, the firm says.