It's Never Too Late to Save for Retirement
Retirement can sneak up on you.
While it seemed like a lifetime away at one point, it now may feel like retirement is just around the corner. Maybe at one point, you wanted to work forever, but now you’re ready to walk out of your workplace for good. Or maybe you’ve started daydreaming about a little cabin on a lake. You may have even entertained the idea of starting that business you’ve always imagined but could never commit to because of your career. But if you’re in your 50s and have little saved for retirement, it may feel like these dreams will only ever be dreams.
You’re not alone. Annuity.org estimates that 22% of people have saved less than $5,000 towards retirement, and 15% haven’t saved at all.
There are many things you can start to potentially boost your retirement savings. Here are some of them:
- Inventory Your Spending. Do a detailed inventory of your current spending and see what can potentially be reduced or eliminated. This could be downsizing to a smaller home, moving to a more affordable city, or reducing the number of vehicles you own. This can be especially important if you carry a large mortgage that you don’t want to be paying down when you’re in your 70s.
- Change Your Retirement Age. Consider putting off retirement. If you were unable to save properly earlier in life, putting off retirement by five or ten years will give you additional time to potentially build your savings.
- It's Time for Catch-up Contributions. If your 401(k) plan allows it, you can take advantage of catch-up contributions. After you turn 50, you can contribute an additional $7,500 to traditional and safe harbor 401(k) plans, or $3,500 to SIMPLE 401(k) plans. You can learn more about contribution limits through the IRS website.
- IRA Contribution Increase. If you have a traditional or Roth IRA, you can increase contributions by $1,000 (for a total of $7,500) when you turn 50.
- Wrangle Your Debt. Try to eliminate credit card debt. When you’re on a fixed retirement income, every bit of savings matters. High interest and late payment fees can quickly eat away at your savings. Aim to only use your credit card if you know you can pay the bill in full each month, or in case of emergency.
- Consider a Post-retirement Career. Work in retirement doesn't have to mean laboring in a role you don't like. Use your skills to your advantage or as a way to change jobs. While many retirees look forward to the day they stop working, some struggle with the idea that they’ll no longer be using their skills in a meaningful way. This is why some retirees start a new career in retirement, expand their hobbies into a business, or work in a job they love rather than something they had to do to pay the bills. So if an intriguing business venture shows up close to your retirement, don’t necessarily write it off. It may be your post-retirement career.
It's Time to Talk to a Financial Professional
Whether you plan to work past retirement age or want to make the most of the next few working years, increasing your saving efforts may increase the opportunities available when you do retire.
This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets. This material was developed and produced by Advisor Websites to provide information on a topic that may be of interest. Copyright 2023 Advisor Websites.