Deferred compensation offers you the ability to make extra payments, called “annual catch-up contributions,” to increase your overall account balance and therefore increase the amount eligible to be paid out. However, amounts you can contribute do vary by plan, and the number of years you can add catch-up payments vary by your age and proximity to retirement. These contributions are generally all pre-tax, and they grow tax-deferred - another important consideration.
So, first of all, make sure you are taking advantage of your deferred comp annual contribution limits. For 2015, elect 457(b) special catch-up provisions during the three years prior to retirement to increase your contributions over the period to $36,000. Also, from 50 years of age until retirement, you can increase 457 per-annum payments from $18,000 to $24,000.
Keep in mind, you may be eligible for other favorable retirement plans like IRAs while contributing to deferred comp. While not technically part of your pension benefits, maximizing the amounts of any traditional or Roth IRA accounts you might hold is also useful. For example, annual contribution limits for regular IRAs and Roth IRAs (certain income restrictions apply) are $5,000. Catch-up provisions let workers 50+ contribute an additional $1,000 per year. That extra $1,000 a year can make a difference. If you squirrel away $6,000 each year instead of $5,000 for 15 years and earn an average 8% annual return, you'll end up with $170,000 rather than $141,000. (Rate of return is for illustrative purposes only and is not indicative of any particular investment; your results will vary)