Should Older Workers Contribute to IRAs?
Older workers with earned income—including those who've already started taking required minimum distributions (RMDs) at age 73—are still allowed to make contributions to traditional IRAs. But does it make sense to do so?
Under the right circumstances, contributing to an IRA as an older worker can be a useful complement to your overall tax strategy. For example, contributing to an IRA could make sense if you want to:
1. Lower your taxable income
If you meet certain requirements, you may be able to deduct traditional IRA contributions, thereby reducing your taxable income for the year (up to the 2025 annual contribution limit of $8,000 for those ages 50 and older).
If you—and your spouse—are not offered a retirement plan by an employer, then you're eligible to deduct the full amount of your traditional IRA contributions, up to the contribution limit. However, if either of you participates in a workplace retirement plan, your deduction phases out depending on your filing status and income.
If your deductible contributions reduce your income to less than $25,000 as a single filer or $32,000 as a joint filer, you may be able to avoid having your Social Security benefits taxed. (Admittedly, this is quite a low ceiling and may not be possible for those with significant savings.)
2. Benefit from a lower tax bracket in retirement
Making tax-deductible contributions to a traditional IRA now—if you're eligible—allows you to defer paying taxes until you're in a potentially lower tax bracket in retirement. This could be especially advantageous for workers who expect to retire in the next few years and want to beef up their savings before they leave the workforce.
3. Perform a backdoor Roth conversion
If your income exceeds Roth IRA contribution limits—$165,000 for individuals in 2025, $246,000 if married—you may be able to make after-tax contributions to a traditional IRA and then convert the funds to a Roth IRA.
However, it's important to know that the IRS' pro rata rule requires that you include all your IRA assets—meaning those funded with pretax (deductible) contributions and those funded with after-tax (nondeductible) contributions—when calculating the conversion's taxes. And the more pre-tax assets you have in your overall portfolio, the larger the tax bite could be for the conversion.
Once you're 59½ or older and have held the account for five years, you can withdraw contributions and earnings from a Roth totally tax-free. Plus, such accounts aren't subject to RMDs, giving you more flexibility in your retirement cashflow and potentially limiting your overall tax liability.
Bottom line
Older workers have a fair number of saving options now, so it's wise to work with a financial planner or tax professional to determine how best to achieve your retirement goals.