Not going for the max
What you contribute annually to your IRA is paramount to how much you will have in your nest egg, later on. It may be better to feel a slight sting each year, than a huge pain, after you retire. “Back when I opened my first Individual Retirement Account (IRA) in March 1983, I wasn’t particularly diligent about maxing out my annual contributions. So when I’d begin working on my income taxes each year, I’d look at my bank accounts to see how much I could afford to contribute to my IRA. The maximum annual contribution back then was $2,000 per year; but I often contributed only half that amount. I now know that underfunding my IRA by $1,000 per year for 31 years (assuming an average annual return of 6.9 percent from an IRA invested in an S&P 500 index mutual fund) meant $100,180 less in my retirement kitty at the age of 62! If I’d realized how much it would ultimately cost me to underfund my IRA, I’d have figured a way to come up with that extra $1,000 annually. After all, how many retirees can give up $100,000 in retirement?” says Timothy G. Wiedman. D.B.A., PHR, SHRM-CP, retired associate professor of Management & Human Resources at Doane University in Crete, Nebraska. Here’s how you can retire with a cool million by age 50.