The Impact of Missing the IRA Contribution Deadline on Your Retirement Savings

Why the IRA Deadline Matters

Procrastination is a common trait, and it's easy for any of us to shrug and say something like 'Eh, I'll contribute next year.' But that can have big and bad results.

For 2023, the IRA contribution limit is $6,500.

(Those aged 50 or older can contribute $7,500. And just so you know, for 2024, the limit rises to $7,000 -- and $8,000 for those 50 and older.) So let's assume that you skip your 2023 contribution, which we'll assume would be $6,500. That means that your IRA account will miss out on a $6,500 chunk of change that could have been invested for you, growing year after year.

After This Many Years of Your Single $6,500 Investment Growing at 8%...

• 10 years - $14,033
• 15 years - $20,619
• 20 years - $30,296
• 25 years - $44,515
• 30 years - $65,407
• 35 years - $96,105
• 40 years - $141,209

See? Much will depend on your current age and when you will retire, but even if you're 55 now and have only a decade before retirement, you'd be giving up having an extra $14,033 in your retirement coffers by skipping your 2023 contribution.

Your Loss in Context

Each of us needs to be planning for our retirement, and saving and investing for it, too. Don't count too much on Social Security. It's important and will be vital to your financial security in retirement, but it probably won't deliver as much income as you'd like. The recent average annual retirement benefit was $1,909 as of January, amounting to almost $23,000 for the year.

That's why missing a seemingly small $6,500 IRA contribution can really hurt you in the future. That's even more true if you're 50 or older and could be contributing $7,500 -- and $8,000 next year. Keep in mind, too, that if you're contributing to a Roth IRA, if you follow the rules, you'll be building a nest egg that you can tap in retirement tax-free!

Investing for retirement within an IRA or in a regular, taxable account at a good brokerage can be fairly easy, too, if you opt for one or more simple, low-fee broad-market index funds.

Don't Delay Contributions

Contribute to your IRA for 2023 now and consider making your 2024 contribution as well to maximize your retirement savings potential. Act today to secure your financial future and retire confidently.