If you plan to retire within the next 10 years, it's time to start getting serious about preparing for a future without a paycheck.
You'll need a hefty retirement account to support you, and you must do everything possible to be fully financially prepared once you leave work. Here are three steps you should take now to prepare for your impending retirement.
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1. Take advantage of catch-up contributions if you're old enough
Once you hit 50, the government wants to give you a little extra help saving for retirement, in the form of catch-up contributions.
Catch-up contributions increase the amount of money you can contribute to tax-advantaged accounts such as your 401(k) or IRA. Here's how they work:
- In 2021, you can contribute $19,500 to a 401(k) if you're under 50. If you're 50 or over, you can make an additional $6,500 catch-up contribution for a total of $26,000.
- You can contribute $6,000 to a traditional or Roth IRA in 2021. But if you're eligible for catch-up contributions, you can contribute an extra $1,000 for a total of $7,000.