it’s essential to periodically review your retirement savings strategy. Life circumstances, such as changes in income, employment, or tax laws, can impact your optimal contribution levels and account choices. Regularly assessing your contributions ensures that you stay on track to meet your retirement goals and take full advantage of the tax benefits and growth potential each account offers.
Spousal IRAs offer a unique advantage for couples where one spouse has little to no earned income. As long as the couple files a joint tax return, the working spouse can contribute to a Spousal IRA on behalf of the non-working or lower-earning spouse.
The contribution limits for Spousal IRAs are the same as for individual IRAs. For 2024, this means the working spouse can contribute up to $6,500 to the Spousal IRA, and if both spouses are over 50, the catch-up contribution rules apply, allowing up to $7,500. This means a couple can potentially contribute $15,000 annually if both are eligible for catch-up contributions.
So, what exactly is a 401(k), and why is it such a big deal in the world of retirement planning? Well, think of it as your personal savings vessel, tailor-made to sail you smoothly into your retirement sunset. Named after the section of the U.S. tax code that brought it into existence, the 401(k) allows you to save and invest a portion of your paycheck before taxes are taken out. This pre-tax advantage means you can grow your retirement nest egg more effectively, as your investments have the potential to compound over the years without the immediate tax bite.
