If you're someone who has put off saving for retirement, don't feel bad. Many people are in the same position as you are, having chosen to have families, buy a house, and pay down student loans during their early working years, leaving little extra to save for retirement. Now that you're a little older, though, you know that you must begin saving for your retirement. Obviously, it's better to begin saving as much as possible when you're younger and avoid early withdrawal penalties, as that gives the funds more time to grow before you'll need them, but you're always better off saving whenever you can, regardless of your age.

Applying for a Roth IRA

Because some of the tax friendly retirement accounts, such as a Roth IRA, have some different types of rules for investors once they reach age 50, some people become confused about their options for making use of a Roth IRA at that point in their lives. The rules that apply to people who've reached age 50 have nothing to do with starting a Roth IRA, however, so you don't have to worry in this situation. You certainly can apply for a Roth IRA at age 50, 55, or even 60 or older, if you want. There are no limits in terms of age as to when you must open a Roth IRA account.

The biggest change that occurs for those who are starting or maintaining a Roth IRA once they reach age 50 has to do with the amount of money they can contribute to the account. Before age 50, Roth IRA account owners are limited to contributing up to $5,000 per year to the account. It's worth noting that those who make a large amount of money, such as more than $173,000 annually, will see the amount of money they can contribute to a Roth IRA reduced to a number before $5,000.

Once you've reached age 50, though, the rules and regulations that govern the use of Roth IRAs give older Americans the chance to catch up on their retirement savings. This catch up regulation allows people over 50 to begin contributing up to $6,000 annually to their Roth IRA accounts. The same limitations exist for anyone who exceeds the maximum annual salary, but most Americans over 50 can contribute a bit extra to their Roth IRA accounts to help them advance toward their retirement goals more quickly.

Risks to Older Investors

If you're an older investor who is just starting out with a Roth IRA, you don't have contribute the maximum $6,000 annually to your Roth IRA account. You can deposit a smaller amount of money in the retirement account, if that's all you can afford for the current year. However, if you only contribute $3,000 to the Roth IRA in one year, you are not allowed to make up that $3,000 plus another $6,000 the following year. You are limited to up to $6,000 in annual Roth IRA deposits each year, regardless of what you contributed in the past or what you will contribute in the future.

There's little doubt that starting a Roth IRA account after age 50 has some risks to your potential success in accumulating retirement funds. Because of the fluctuations that naturally occur in the stock market, people who are able to invest their retirement funds over a longer period of time will have a better chance of achieving significant gains. Still, it's never too late to begin saving for retirement. Saving is one of those decisions where it's better to start late than to not start at all.