Retirement can be a complicated topic. From translating all the complex financial jargon to understanding how much you should be saving for your golden years, it can sometimes feel like trying to learn a foreign language.

And because finance isn't always the most exciting topic to think about, many people simply aren't very knowledgeable about saving for retirement. In fact, two-thirds of Americans said they don't know as much as they should about retirement investing, according to a survey from the Transamerica Center for Retirement Studies.

Arrow made of a dollar bill

Image source: Getty Images

While there are a host of aspects about retirement that many people don't fully understand, researchers found that there are two factors, in particular, that most people are unaware of that could help them save more money: catch-up contributions and the Saver's Credit.

What are catch-up contributions?

Regardless of the type of retirement account you use -- a 401(k), traditional IRA, Roth IRA, etc. -- there are limits to how much you can contribute each year. For 2019, the yearly contribution limit for 401(k)s is $19,000. For IRAs, the limit is $6,000 per year.

However, if you're age 50 or over, you can contribute more than that. With a 401(k), you can contribute an additional $6,000 per year, while IRAs allow you to save an extra $1,000 annually. These catch-up contributions are meant to help older workers save more as they near retirement age, yet not everyone knows they exist. According to the Transamerica survey, less than half of generation X and only 63% of baby boomers were aware catch-up contributions even existed.

Part of the reason why so many people don't know about the incentive is because few workers actually max out their retirement accounts. After all, if you're saving nowhere near $19,000 per year in your 401(k), you're probably not thinking about how to save an extra $6,000 on top of that. That being said, if you can supercharge your savings and take advantage of catch-up contributions, your retirement fund will thank you down the road.

For example, say you're 50 years old, you have $50,000 in an IRA, and you're currently maxing it out by saving $6,000 per year. If you continue saving at that rate, assuming you're earning a 7% annual return on your investments, you'd have around $289,000 saved by age 65. If you take advantage of catch-up contributions, though, and contribute $7,000 per year, all other factors remaining the same, you'd have roughly $314,000 saved by 65. So while you'd only be saving less than $100 more per month, it would amount to an extra $25,000 over time.

What is the Saver's Credit?

Not only can you save more for retirement with catch-up contributions, but you may also see a tax break on those contributions with the Saver's Credit -- something only 38% of workers are aware of, according to the Transamerica survey.

With the Saver's Credit, you can receive a credit of up to $1,000 per year (or $2,000 per year if you're married filing jointly), depending on your income and how much you contribute to your retirement account. The maximum contribution amount that qualifies for the credit is $2,000 per year (or $4,000 per year if married filing jointly), and you can receive a credit of 50%, 20%, or 10% of your contributions depending on how much you earn each year. Here are the limits for 2019, according to the IRS:

Credit Rate Married Filing Jointly Head of Household Single, Married Filing Separately, or Qualifying Widow(er)
50% of your contribution Adjusted gross income not more than $38,500 Adjusted gross income not more than $28,875 Adjusted gross income not more than $19,250
20% of your contribution $38,501-$41,500 $28,876-$31,125 $19,251-$20,750
10% of your contribution $41,501-$64,000 $31,126-$48,000 $20,751-$32,000
0% of your contribution more than $64,000 more than $48,000 more than $32,000

Source: IRS

The Saver's Credit is especially beneficial to those with lower incomes who are struggling to save, because the less you earn each year, the bigger tax break you'll receive. And if you're pinching every penny, an extra $1,000 can go a long way -- not to mention provide a strong incentive to contribute at least $2,000 to your retirement fund each year.

Retirement may not be the most riveting topic on your mind, but it is important to understand as much as you can about it. The more you know about these types of incentives, the easier it is to jump-start your savings and enjoy a more comfortable retirement.