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June 3, 2013

It’s never too late to start saving for retirement

While any financial expert will tell you that the best way to save for retirement is to start as early as possible, for many people that simply isn’t an option. Either they have never saved, have had major financial problems that used up all of their savings or have had other financial difficulties. Whatever the case may be, there are literally millions of people who just never were able to accumulate the kind of real money that they’re going to need to be able to retire. It is for those people that we put together our blog today. Hopefully it will give you some valuable tips and advice for retirement saving if you’ve started late. Enjoy.

One of the first things that anyone starting a retirement plan late needs to do is to be realistic. While it may not be a lot of fun the fact is that you may need to scale back your lifestyle, adapt your housing and possibly relocate as well as work longer if you want to have any hope of having a decent nest egg ready for you when you retire.

Of course nothing will work unless you first put together a plan. There are plenty of planning calculators online that will help you figure out what you need to do specifically in order to have enough money to retire. On their website the AARP has an excellent retirement planning guide that will take you through all the steps necessary to put a plan together that’s right for you. Talking to a financial planner as soon as possible is also an excellent idea.

It can’t be emphasized enough that you need to put aside your regret and guilt and focus on catching up. Saving at least 10% of your current income weekly is a good start although 20% would be better. Setting up a monthly auto transfer to a retirement account at your bank is also an excellent idea as it automates your savings and it keeps that money out of your hands.

If you work for a company that manages 401(k) plans then you definitely should either open one of those plans or stuff it to the max with money. 401(k)s as well as individual retirement accounts and Roth IRAs are practically the best way to save money for retirement and are very low risk. Very few people however use them to their full advantage and, if you’re starting late, you definitely should.

Stocking up on stocks is also an excellent idea as the simple fact is that the S&P 500 has never had a negative return and its worst return was 5%. (Which is still pretty good.) Many financial experts recommend that you should use your age as the number to determine the percentage of how much risky investments you keep in your investment portfolio. For example, they say that if you are 55 you should have 45% of your portfolio in stocks. Of course, if you’re not very knowledgeable about investing or uncomfortable making your own investment choices you should definitely consult an investment advisor who also deals with retirement planning.

While stuffing as much money into your IRAs and 401(k)s is an excellent idea, the fact is that if you spend too much money on living expenses you’re not going to have any to put in them. With that in mind here is a list of things that you can do to lower your living costs and have more money to put into your retirement accounts.

  • Sell your large home and purchase a smaller one or rent an apartment.
  • Get rid of your large gas guzzling car and purchase a smaller, fuel-efficient car instead.
  • Move to a state that has lower or better taxes.
  • Cut back on entertainment, travel and other nonessential expenses.
  • Get a second part-time job to earn more income.

The simple fact is that saving for retirement can be a challenge at any age but, if you’re already in your late 40s or 50s  it can be even more daunting. This blog has hopefully given you a few ideas about what you need to do and how you need to do it. There’s no time like the present to get started so get out there and put  will this info and advice to good use. Of course make sure to come back and visit us regularly for more financial tips and advice. We’ll see you then.

Filed Under: Retirement

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