Retirement planning is all about maximizing your resources, and for those 50 and older, catch-up contributions offer a meaningful opportunity to do just that.
The following two charts illustrate how adding $1,000 annually to your retirement savings (the catch-up amount) can grow to an additional $21,551 by age 67, assuming a 7% annual return.
Chart A (no catch-up)
Chart B (includes $1,000 catch-up contribution)
While $21,551 isn’t necessarily a life-altering sum, think about the possibilities that extra cushion could provide in retirement.
For example, maybe you:
- Boost your living experience, (e.g., add a cozy sunroom for year-round enjoyment).
- Establish a small scholarship in your family’s name.
- Fund an annual vacation for the next decade, (e.g., rent a beachfront home to host family reunions).
- Reduce financial stress by covering unexpected health care expenses.
- Support family milestones like a grandchild’s education or wedding.
The key takeaway?
Every dollar saved today creates more possibilities for tomorrow.
If you’d like to explore how catch-up contributions fit into your financial strategy, reach out.
PS: In case you missed it, we wrote a detailed post describing 2025 Tax Planning Resources, including a Key Financial Data spreadsheet.
–David Bunker, Financial Advisor & Licensed Fiduciary
Before You Go
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This communication was prepared with financial writer Sharron Senter’s assistance, based on interviews with David Bunker, a financial advisor and licensed fiduciary.