Boost Your Retirement Savings with Catch-Up Contributions
You know the importance of saving for retirement. The good news is that you may be able to boost your retirement savings with "catch-up" contributions if you're age 50 or older. Assuming your employer permits them, catch-up contributions enable you to defer additional amounts above and beyond the annual contribution limit for your plan.
For example, in 2018 individuals are allowed to contribute up to $18,500 to certain employer-sponsored retirement accounts. However, you may be able to contribute an extra $6,000 this year, for a total of $24,500.* In addition, if you have an Individual Retirement Account (IRA), you also can contribute an extra $1,000 above the $5,500 limit for 2018.
To see the impact catch-up contributions may have on your retirement savings, consider the following hypothetical example. Let's say you turn 50 this year and are able to make the maximum allowable contribution to your employer-sponsored retirement plan each year until you retire at age 65. The following chart highlights how much extra savings you potentially could have at retirement if you also took advantage of catch-up contributions over that 15-year period.
You can view the retirement plan dollar maximums for 2018 here. If you have any questions, please contact your local Mutual of America representative or call .
This hypothetical example is for illustrative purposes only and does not represent any actual investment performance, price or yield. This illustration shows only catch-up contributions made at the beginning of each year over a 15-year period, and assumes an annual rate of return of 6%. For this purpose, it assumes the allowable catch-up contribution amount remains unchanged at $1,000 and $6,000 for each of the 15 years. Investment returns are not guaranteed, and your actual return may vary significantly from that shown.
* Tax-Deferred Annuity, 403(b), 401(k) and governmental Section 457(b) Plans. Eligible Section 457(b) Deferred Compensation Plan participants can make a special catch-up contribution if they are within three years of their normal retirement age. An additional special "catch-up" contribution is available for employees in 403(b) plans with 15 or more years of service with certain nonprofit employers.
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Mutual of America's group and individual retirement products are variable annuity contracts and are suitable for long-term investing, particularly for retirement savings. The value of a variable annuity contract will fluctuate depending on the performance of the Separate Account investment funds you choose. Upon redemption, you could receive more or less than the principal amount invested. A variable annuity contract provides no additional tax-deferred treatment of benefits beyond the treatment provided to any qualified retirement plan or IRA by applicable tax law. You should carefully consider a variable annuity contract's other features before making a decision.