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Tips for Growing a Retirement Nest Egg


Open a Roth IRA

            The difference between a Roth IRA and a traditional IRA is that Roth contributions are not tax deductible. However, once age 59 ½ is attained, withdrawals of earnings and growth from a Roth IRA are 100% tax-free.  Traditional IRA withdrawals are taxable at your current tax rate. I don’t know about you, but I would personally rather pay taxes on $4000 and be done with it forever. Whatever that $4000 for that year grows to, will be completely tax-free to me in retirement. If I invest $4000 from that year’s contribution in a stock and I hit a home run, and it grows to$100,000 by my retirement-- that’s all going to be completely tax-free. If I do that in a traditional IRA, $96,000 of that will be taxable upon withdrawal from the IRA.


Start early—the sooner, the better

            Employ the power of compounding. Instead of working for your money, let your money work for you.  See how the power of compounding works for you exponentially in later years.


Max out contributions

            You get out if it what you put into it. “A man reaps what he sows.”


IRA Contribution Limits:

















Open a Spousal IRA

            If your spouse does not “work” and meets eligibility requirements, money may still be set-aside for retirement. Whatever your current contribution limit is, effectively doubles your retirement contribution between you and your spouse. Two are better than one.


Participate in a 410(k)

            If you have a 401(k) available to you at work, enroll in it. Many employers match a percentage of your own contributions. Never mind that withdrawals will be taxable, you get a current tax deduction plus your employer’s contributions are 100% free money! That beats all investment returns!



            Do not put all your “eggs in one basket.” Diversify your investments among individual stocks, bonds, mutual funds, and cash.



Buy stocks that pay regular dividends. Never underestimate the seemingly small percentage dividends contribute to your retirement. The quarterly cash infusions help to pump up returns, reduce volatility and give you extra cash to purchase more stocks when the market is down. A few percentage points (in addition to any capital appreciation) compounded over many years can make significant batches of cash coming into your account in retirement years.