Can a Retired Person Put Money in a Traditional IRA?

Can a Retired Person Put Money in a Traditional IRA?
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To invest in a traditional individual retirement arrangement, you must be earning taxable income. If you’re no longer working at all, you don’t qualify to invest in a traditional IRA. However, if you’ve taken on a part-time job or you’re self-employed in retirement, you may qualify to open an IRA. If you are eligible, opening a traditional IRA is a smart way to save and invest -- especially considering its tax benefits.


A traditional IRA is a collection of investments that grow tax-free over the years. When you add funds to your IRA, you receive a tax deduction each year. When you reach age 59-1/2, you may withdraw from your IRA without paying a fee. However, you must pay taxes on your withdrawals. You may invest up to $5,000 into a traditional IRA each tax year, or $6,000 if you are 50 or older.

Traditional IRA Requirements

Though you must be earning some form of taxable income to contribute to an IRA, there is no restriction on how much income you can earn. Taxable income includes things like wages, tips, commissions and self-employment income. If your only income is from pensions, Social Security benefits, interest and dividends, you cannot contribute to a traditional IRA. Additionally, you must be under age 70-1/2 to contribute to an IRA.

Contributing to an IRA

If you’ve decided to open an IRA, you may do so at your financial institution, through a mutual fund, a brokerage company or a life insurance company. To take advantage of the tax deduction associated with a traditional IRA, make sure to invest before the year’s tax deadline. Then, when you file your taxes, you may deduct your contribution, which decreases your taxable income for the previous tax year.

Roth IRAs

If you don’t meet the qualifications for investing in a traditional IRA, consider opening a Roth IRA. You may open a Roth IRA at any age, as long as you have taxable income of $122,000 or less and at least some of it is earned income. With a Roth, you contribute after-tax dollars, which means you don’t get a tax deduction now but you also don’t have to pay taxes on your withdrawals. As publication, you may contribute up to $6,000 into a Roth IRA each tax year if you are 50 or older. There is no required age for withdrawal, so you may keep the money in your account as long as you’d like.