Maxed Out at Work? Don’t Stop!

Jun 8, 2015
Author: Scott Hanson


Some people contribute the maximum amount to their 401(k) plans at work and then want to find other additional ways to save for retirement. They should be proud of themselves for doing that, since most people end up at retirement age with far too little in their retirement accounts because, regardless of their income, they tend to find other “needs” that require the money they would otherwise invest.

You can contribute up to the limit to a Roth IRA as long as your income falls below $116,000 if you’re single or $183,000 if you’re married (in 2015). This type of retirement savings account won’t help reduce your current income taxes, but the money will grow tax-deferred until you retire, and you will be able to remove it from the account tax free as long as you wait until reaching the age of 59½ to do so.

If you want to save more money than the Roth IRA will allow, or if your income is too high to allow you to qualify, you’ll have to save and invest your money in a different way. If that is the case, make sure you invest tax efficiently by choosing investments that do not generate much in the way of taxable dividends or capital gains.

If this is your situation, be proud of yourself for not being part of an expanding majority of people in America who are taking the nation’s savings rate down to horrific levels. You have no doubt learned that when you have money, you shouldn’t take chances with it.

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