It’s a common assumption that once you retire, your retirement planning journey comes to an end. You’ve reached the finish line, the plan is in motion, and now it’s time to live off your savings. But what if you’re still earning income in retirement? Or perhaps you’ve discovered you enjoy working part-time, consulting, or even launching a small business after leaving your full-time career? In these cases, a new question often arises: Can I contribute to retirement accounts after I retire?
The short answer is: Yes, in many cases, you can. But like most financial questions, the details matter. Whether or not you’re eligible to contribute to retirement accounts after retirement depends on your income, the type of account, and your age. Let’s break it down.
Understanding Eligibility: It’s About Income, Not Age
Many people assume that once you’ve “retired,” you can no longer make contributions to retirement accounts like IRAs or 401(k)s. But the rules are actually based on earned income, not retirement status.
The IRS defines earned income as wages, salaries, bonuses, commissions, self-employment income, or other taxable income from working. Investment income, pensions, Social Security benefits, annuity payments, and rental income are not considered earned income.
So, if you’ve retired from your full-time job but continue to earn income say, by working part-time, freelancing, or running a small business you may still qualify to make contributions to certain retirement accounts.
Traditional and Roth IRAs: Still Open (With Conditions)
Traditional IRAs used to have a rule that prohibited contributions after age 70½. But that changed with the SECURE Act of 2019. Now, there is no age limit for contributing to a Traditional IRA as long as you have earned income.
However, you must meet two key requirements:
- You (or your spouse, if filing jointly) must have earned income.
- Your contribution cannot exceed your total earned income for the year.
For 2024, the maximum contribution is $7,000 ($8,000 if you’re age 50 or older), assuming you earned at least that much.
Roth IRAs have never had an age limit for contributions. As long as you meet the income limits and have earned income, you can continue contributing to a Roth IRA at any age.
That’s right even at 75 or 80, if you’re earning a paycheck from consulting gigs or a side hustle, you could potentially deposit money into a Roth IRA. This offers a powerful way to grow tax-free savings while reducing taxable income in retirement.
Example: Mary, age 72, retired from her corporate job but now works 20 hours a week as an independent financial coach, earning $30,000 annually. She qualifies to contribute up to $7,000 to a Roth IRA in 2024. Even better, because Roth contributions grow tax-free and withdrawals are tax-free in retirement, this can be a savvy wealth-building strategy long after her formal career ends.
401(k) Plans: Less Flexibility, But Still Possible
Unlike IRAs, 401(k) plans are tied to employment. So, if you’ve fully retired and are no longer working for an employer that offers a 401(k), you can’t continue contributing to that plan.
However, if you take on a post-retirement job even part-time and your new employer offers a 401(k) with matching or other benefits, you may be eligible to participate. Some plans do have age or service requirements, so check with your employer’s HR department.
Another option? Starting your own business.
If you’re self-employed in retirement — running a consulting firm, teaching classes, or selling handmade goods online you can set up a Solo 401(k) (also known as an individual 401(k)). This account type allows self-employed individuals with no full-time employees (other than a spouse) to contribute both as the employer and the employee.
For 2024, the total contribution limit for a Solo 401(k) is $69,000 or $76,500 if you’re age 50 or older.
Example: John, age 68, retired as a software engineer but now does freelance app development. He sets up a Solo 401(k) and contributes $15,000 as an employee and $20,000 as an employer, totaling $35,000 in tax-advantaged retirement savings all earned from post-retirement work.
Other Retirement Accounts to Consider
Beyond traditional IRAs, Roth IRAs, and 401(k)s, there are other retirement accounts that may be options depending on your career path:
- SEP IRA: Designed for self-employed individuals and small business owners. You can contribute up to 25% of your net self-employment income (up to $69,000 for 2024).
- SIMPLE IRA: If you work for a small business that offers a SIMPLE IRA plan, you may be able to continue contributing even as a part-time employee in retirement.
These accounts can be especially useful if you’re earning substantial income through consulting or contract work.
Why Contribute After Retirement? Key Benefits
You might ask: Why keep saving for retirement once you’re already retired? Here are several compelling reasons:
- Tax Advantages: Contributions to traditional accounts reduce taxable income; Roth contributions grow tax-free.
- Longevity Planning: People are living longer, and retirement could last 30+ years. Additional savings can help sustain your lifestyle.
- Legacy Goals: Building more retirement assets means more to potentially pass on to heirs — especially with Roth IRAs, which have no required minimum distributions (RMDs) during your lifetime.
- Healthcare and Emergency Costs: Unexpected expenses can arise. More savings provide a stronger safety net.
Additionally, continuing to save can help offset inflation and give you peace of mind that your financial plan remains flexible and resilient.
Things to Watch Out For
While contributing after retirement is possible, there are a few pitfalls to avoid:
- Excess Contributions: Putting in more than you earned can trigger IRS penalties. Keep accurate income records.
- RMDs and Roth IRAs: Traditional IRAs and 401(k)s require you to start taking Required Minimum Distributions (RMDs) at age 73 (under current rules). Roth IRAs do not have RMDs during your lifetime, making them especially attractive for continued contributions.
- Income Limits for Roth IRAs: High earners may be phased out of Roth IRA eligibility. For 2024, the phase-out begins at $146,000 for single filers and $230,000 for married couples filing jointly.
- Coordination with Social Security: Earning above certain thresholds while collecting Social Security before full retirement age can reduce your benefits — though that’s less of a concern once you’ve reached full retirement age.
Final Thoughts
Retirement doesn’t have to mean the end of retirement saving. If you’re still earning income whether through part-time work, self-employment, or passion projects you likely have the green light to keep growing your retirement nest egg.
The ability to contribute to IRAs and certain workplace plans after retiring isn’t just a technical rule; it’s a financial opportunity. It allows retirees to reduce taxes, extend portfolio longevity, and build greater financial security all while staying engaged in meaningful work.
So, the next time someone says, “I’m retired, so my retirement planning is done,” don’t be so quick to agree. The truth is, retirement can be an active and dynamic phase and in many cases, your retirement accounts can grow even after you’ve officially retired.
Bottom line: As long as you have earned income, the door to retirement contributions remains open. Take advantage of it wisely.