retirement

Fund an IRA early to grow a bigger account

For 2013 and 2014, you can contribute up to $5,500 per year to your traditional IRA or Roth ($6,500 if you're 50 or older), though some income limits apply. Thus, those who qualify would have to scare up $11,000 combined.

That's easier said than done on the heels of a holiday hangover, from which many families are still chipping away at credit card debt.

It can be tempting to skip the prior year contribution altogether and designate those dollars for your current-year IRA to get ahead, but that's a mistake, says Slott.

It's tough to double up if you don't have the money, but you only have to do it once and then you're ahead of the game forever, he says, noting investors who wish to fund their 2014 IRA now should first fund their 2013 account before April 15. Some people also ask if they should send half of their savings to the prior year IRA and half to the current year, but you should always max out your prior year first to take advantage of the tax deduction.

Investors who can't come up with the cash to fund two IRAs in a single year might consider shifting investments from a taxable investment account into their IRA, says Hammond. You can liquidate the investments and put the proceeds into your IRA, he says.

Depending on the equity in your home, you could also potentially tap into your home equity line of credit, but that strategy is ill-advised for all but the most disciplined of savers, says Tom Scanlon, a Certified Financial Planner with Raymond James Financial Services near Hartford, Conn.

You can pay off your HELOC over time with interest, but if you don't have the discipline to pay it off quickly, it's a non-starter, says Scanlon.

Several ways to save for it

Perhaps the most prudent way to get ahead is simply by saving.

By socking away $458 every month ($5,500/12 = $458) between now and the end of the year, you'll have $5,500 ready to deposit early next year. Better yet, open an account and invest that money directly into an IRA on a monthly basis.

Any windfalls you receive between now and Dec. 31, such as year-end bonuses, tax refunds or raises, can ease the pain of saving considerably.

Don't forget, too, to examine your budget for money leaks. The more you reduce your day-to-day living expenses, the more you'll be able to save.

Try negotiating lower rates on your car, auto or home insurance, bring your lunch to work, plan your meals to avoid food waste, and put a hold on that trip to Europe -- just for a year.

It's really just a matter of prioritizing, says Scanlon. Few of us are going to get a pension, and they keep increasing the eligibility age for Social Security. You must take personal ownership of your savings today.

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