Don’t despair when the unrequested AARP membership shows up in your mailbox. Hitting the half-century mark is cause for celebration — at least where retirement saving is concerned.
Here’s why: Though the contribution limit on 401(k)s and 403(b)s is currently $18,500* a year, and $5,500* is the most you can add to an individual retirement accounts, starting the year you turn 50, you can invest more.
With 401(k)s and 403(b)s, you can add $6,000* more per year after you turn 50, for a total of $24,500. For IRAs, you can put away $1,000* extra per year, totaling $6,500. Those sums will add up, because, at 50, you still could have more than a decade to contribute.
Becoming an empty-nester
Depending on how old you were when you started a family, you might have a few years to turbocharge your savings after the kids finally fly from the nest. You may no longer be footing college tuition bills, car insurance payments, or your child’s cell phone charges. Household expenses including food bills may have also decreased.
If you crank up your retirement savings at this time, you may not even feel it in your day to day life, given what a big bite children can take out of the family budget.
It’s worth noting that families will have differing timelines for when they can take advantage of an empty nest, as more people have delayed childrearing and some adult children are still living at home.