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If you’re earning a high income, you may find yourself running into an unexpected wall when it comes to retirement savings. Traditional and Roth IRA contributions are capped at $7,000, or $8,000 if you’re 50 or older. While these limits may work for many savers, they often fall short for people who earn more or want to retire early.
Once you’ve maxed out your 401(k) and IRA, you might think you’re out of options. But there are several other strategies that can help you keep saving and building wealth for retirement — even if you’ve already hit the traditional limits.
Let’s look at some of the smartest ways to boost your retirement savings beyond the basics.
Consider Real Estate as a Retirement Tool
Real estate investing isn’t just for landlords. Owning property can add another stream of income in retirement and offer solid tax advantages. You can earn monthly cash flow through rent, benefit from appreciation over time, and use depreciation to reduce your taxable income.
You don’t have to manage properties yourself. Real Estate Investment Trusts (REITs) are a hands-off way to invest in real estate through mutual funds or ETFs. Whether you’re buying property directly or investing through REITs, real estate can help you grow wealth in a way that doesn’t depend on traditional retirement plans.
Try the Mega Backdoor Roth Strategy
This strategy works hand-in-hand with after-tax 401(k) contributions. If your plan allows both after-tax contributions and in-service rollovers, you can use the mega backdoor Roth approach to move large sums into a Roth IRA each year.
Here’s how it works: you contribute after-tax money to your 401(k), then roll that amount into a Roth IRA. There’s no income limit for this strategy, so high earners who don’t qualify for direct Roth contributions can still use it. The money then grows tax-free, and you can withdraw it tax-free in retirement. It takes a bit of coordination, but it’s one of the most powerful savings tools available to high earners.
Don’t Ignore Taxable Brokerage Accounts
When you think of retirement savings, taxable brokerage accounts might not be the first thing that comes to mind. But they’re actually very flexible and useful. There are no income limits, no contribution limits, and no penalties for early withdrawals. That makes them a good option for people who want access to their money before retirement age or need more investment flexibility.
You can use these accounts to invest in stocks, bonds, mutual funds, or ETFs. If you hold your investments for more than a year, you’ll pay the lower long-term capital gains tax rate. You can also use losses to offset gains through tax-loss harvesting. While you don’t get the upfront tax break, the long-term benefits are worth considering — especially if you’ve run out of space in your tax-advantaged accounts.
Use the Backdoor Roth When Income Limits Block You
If you earn too much to contribute to a Roth IRA directly, you’re not out of luck. The backdoor Roth strategy is still available. It involves putting money into a traditional IRA and then converting that money into a Roth IRA.
This move works because there are no income limits on conversions. Just keep in mind that if you have other traditional IRA balances, you’ll need to watch out for the pro-rata rule, which can affect how much of your conversion is taxable. It’s smart to check with a tax advisor to make sure the strategy works for your situation.
Build Cash Value with Permanent Life Insurance
Permanent life insurance, such as whole life or universal life, can do more than provide a death benefit. These policies build cash value over time. That cash value grows tax-deferred and can be borrowed against in the future.
Some high-income earners use this feature as a way to create an additional pool of money for retirement. It’s not right for everyone, and the fees can be high, but for certain people it can add both flexibility and long-term value to a financial plan.
Just because you’ve hit the standard limits for 401(k)s and IRAs doesn’t mean you’re out of ways to grow your retirement savings. As a high earner, you have access to tools and strategies that many people don’t use or even know about.
The key is to be proactive. Review your options, talk with a trusted financial advisor, and look for ways to keep pushing your savings forward. With the right steps, you can build a retirement plan that supports the life you want — on your terms.
