How much money do you need to retire comfortably? Consider these tips to get a better understanding of how much you should be setting aside.
Updated Feb. 14, 2022, at 8:55 a.m. CT
If you meant to set aside more money for retirement or health expenses last year, you still have time.
Individual Retirement Accounts
You’ve heard it before, but it’s worth repeating: The sooner you start saving for retirement, the more money you’ll have later when you need it.
IRAs offer a tax-advantaged way to invest—and save—for retirement.
If you’d still like to contribute to an IRA for 2021, here’s what you need to know:
- Eligible individuals can make contributions to a Traditional or Roth IRA for 2021 until April 15, 2022.
- IRA contributions for the 2021 tax year are limited to the lesser of earned income or $6,000 ($7,000 if you’re 50 or older).
- Individuals of any age can now make Traditional IRA contributions if you (or your spouse, if filing a joint return) earned income during that tax year, thanks to the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act).
- You could receive a deduction for Traditional contributions or a saver’s tax credit for Traditional or Roth contributions.
Health Savings Accounts
If you have a high-deductible health plan, an HSA can help you set money aside for current and future medical expenses.
To be eligible for an HSA, you:
- Must be covered under a high-deductible health plan.
- Can’t be covered by another health plan (with limited exceptions).
- Must not be enrolled in Medicare.
- Can’t be claimed as a dependent on someone else’s tax return.
If you want to contribute to an HSA for 2021, here’s what you need to know:
- Eligible individuals can make contributions to an HSA for 2021 until April 15, 2022.
- HSA-eligible individuals can make tax-deductible contributions, earn tax-free dividends and withdraw money tax free for qualified medical expenses.
- You don’t have to use all of your HSA funds each year. Your balance carries over—and remains with you regardless of changes in coverage or employment.
* Contact your tax advisor to verify eligibility and contribution limits.