Emergency retirement planning
If you're in your 40s and don't have a retirement plan, it's time to start thinking about one. As you get older, unforeseen expenses in your life can make saving difficult. While it's beneficial to start saving in your 20s, it's never too late to start planning.
Max out your 401(k): The first step in your emergency retirement planning efforts should be to max out your company's 401(k) plan, if it offers one. Contribute as much as you can possibly afford. The maximum limit for 2012 is $17,000 for employees up to age 50. Be sure to get the full match from your company.
Add an individual retirement account or Roth IRA: If you're trying to catch up late in the game, your 401(k) contributions might not be enough. Add a traditional or Roth IRA if your budget allows. Max out the IRA if you can; otherwise, contribute as much as you can on a monthly basis. Note that if you contribute to a 401(k) plan, the tax deduction you can take on a traditional IRA may be limited by your income.
Retirement planning after 50: Catch-up contributions are allowed after you turn 50. You can contribute an additional $5,500 per year to your 401(k), making your total allowable contribution $22,500. For your IRA, you can contribute another $1,000 on top of the $5,000 per year limit for a total of $6,000. A retirement shortfall calculator will show how long your money will last after retirement.
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