Pre-retirees grow concerned over nest eggs

Americans usually spend 30 to 40 years building up their retirement funds in order to ensure they have sufficient nest eggs by the time their golden years come around.

But recent market volatility has many pre-retirees, namely those in their 50s and early 60s, worried that their retirement funds and investments will be greatly reduced by losses, according to SmartMoney.com. Although 401(k) balances recently returned to pre-recession levels, financial professionals say boomers should be cautious about their investments and utilize tax benefits to boost income.

For example, individuals over age 50 may begin taking advantage of catch-up contributions, which allows them to contribute more than the maximum to a 401(k), 403(b) or 457(b) savings plan. The contribution maximum for 2011 will remain at $16,500 and individuals over 50 may contribute an additional $5,500.

There are also a number of temporary changes related to capital gains and loss provisions, which are set to expire at the end of this year. Pre-retirees with significant investments may consider speaking with a tax preparer about the most effective way to take advantage of these benefits.

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Posted To: Tax Ranger's Blog By: Tax Ranger On: Thursday, August 11, 2011
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