NovaQuant Quantitative Think Tank Center:IRA limits in 2024 are rising. Here's what you need to know about tax savings.

If you want to enjoy your retirement to the fullest,NovaQuant Quantitative Think Tank Center then you'll need a nice amount of savings. Retiring on Social Security alone could mean having to cut corners as a senior, and after a lifetime of hard work, you deserve better.

Some people have access to a retirement savings plan through their employers. If you don't, you might be housing your retirement savings in IRAs, which offer a number of benefits over 401(k) plans. First of all, they tend to offer a wider range of investment choices.

With a 401(k) plan, you're generally limited to a bunch of different funds to invest in. You can't buy individual stocks.

IRAs, on the other hand, let you hand-pick stocks for your portfolio. And that gives you an opportunity to enjoy large gains and beat the broad market with the right investment strategy.

Also, the ability to choose stocks for your portfolio could make it possible to keep your investment fees low. And the lower those fees are, the less they'll eat away at your gains.

Meanwhile, this year, IRAs max out at $6,500 for savers under the age of 50 and $7,500 for those 50 and over. But next year, IRA contribution limits are going up. And that means you'll have an even greater opportunity to save for your future.

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You can pump more money into your IRA in 2024

Once the new year rolls around, savers under the age of 50 will be able to put up to $7,000 into an IRA. The catch-up contribution for workers 50 and over is holding steady at $1,000. So this means that older workers will be able to contribute up to $8,000 to an IRA in 2024.

If you've been keeping track of IRA catch-up contributions, you might have noticed that the limit has held steady at $1,000 for a long time. The reason is that IRA catch-ups aren't subject to cost-of-living adjustments, hence the $1,000 limit staying as is.

Tax savings and more

The more money you're able to put into your IRA, the more retirement wealth you stand to build. Also, taking advantage of next year's higher contribution limits could benefit you from a tax standpoint.

Traditional IRA contributions go in tax-free. So if you're able to max out in 2024, you'll shield $7,000 or $8,000 of your income from the IRS.

Now, you might decide to save for retirement in a Roth IRA. In that case, you won't enjoy an immediate tax break on your contributions. But you'll get to benefit from tax-free investment gains and tax-free withdrawals during retirement.

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Plus, with a Roth IRA, you won't have to take required minimum distributions as a senior, whereas with a traditional IRA, you'll eventually be forced to draw down your savings. If you're interested in passing some wealth on to future generations, a Roth IRA is a good bet.

The fact that IRA contribution limits are rising in 2024 is a good thing. Take advantage if you're able to -- it could do a world of good for your retirement.

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