Boosting Your Retirement Savings: Exploring Options Beyond Your Workplace Plan
As a high earner, you’re likely aware of the importance of saving for retirement. With a solid foundation already in place, you’re wondering how to maximize your savings. The good news is that you have more options than you think, even if you’ve reached the income limit for direct Roth IRA contributions.
Considering a Traditional IRA
You can still contribute to a traditional IRA, although your contribution might not be deductible. The upside is that you’ll still benefit from tax-deferred growth, and you can convert the funds to a Roth IRA in the future. For 2023, you can contribute up to $6,500 ($7,500 if you’re 50 or older) to an IRA.
The Benefits of a Spousal IRA
Since your husband doesn’t work, you can open a spousal IRA in his name. This allows your family to double down on retirement savings. The same contribution limits and deductibility rules apply as they would for any IRA. A spousal IRA is a great way to increase your overall retirement savings.
The Backdoor Roth IRA: A Loophole for High Earners
Although you make too much to contribute directly to a Roth IRA, you can use the backdoor Roth IRA strategy. This involves converting traditional IRA funds to a Roth IRA. While there are some complexities to consider, the tax-free withdrawals in retirement can make it worthwhile.
Maximizing Your Mortgage Payments
With a goal to pay off your mortgage in two years, you might want to reassess your strategy. If your interest rate is lower than 4%, it might be more beneficial to save or invest the extra payments instead. High-yield savings accounts and certificates of deposit (CDs) can provide a higher return than your mortgage interest rate.
Seeking Professional Guidance
To ensure you’re making the most of your retirement savings opportunities, consider consulting a financial advisor. They can help you navigate the complexities of IRAs, Roth conversions, and other strategies tailored to your situation.
Taking Control of Your Retirement Savings
Remember, saving for retirement isn’t limited to official tax-advantaged accounts. You can use high-yield savings accounts, CDs, or other investments to build your retirement nest egg. By exploring these options and seeking professional guidance, you can create a comprehensive plan to secure your financial future.
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