Waiting Until April to Contribute to Your IRA Could Cost You Thousands
We have until April 15th to contribute to the IRA and receive a tax credit, so many of us do that. But that delay could seriously hurt our retirement savings.
The example above is from Vanguard, which compared the returns (in today’s dollars) of two hypothetical investors, each contributing $ 5,500 a year for 30 years and earning 4% annually after inflation. The early investor pays the installment on January 1 of the tax year, and the last minute investor pays the installment on April 1 of the following year. (So, for example, January 1, 2014 versus April 1, 2015 – both are eligible for a tax deduction.)
Result: $ 15,500 delay penalty.
This is further evidence of the importance of saving as early as possible . Often we don’t have all the money available for a lump sum early in the year, but in this case, just take the lazy approach and set up automatic monthly contributions to your retirement fund .
Delaying IRA Fees Until April Could Cost You | Vanguard