You’ve heard the saying all your life: “The early bird catches the worm.” It’s true that planning for retirement early – starting in your twenties and continuing until the end of your career – is one of the most surefire ways to set yourself up for a more secure future, but what if you start late? Are you just doomed to a miserable retirement, living on Social Security and Ramen noodles?
No, not at all. You still have time to get caught up, but you will need to work harder at it than most people.
Max out contributions. If you’re contributing to an employer-sponsored retirement plan, such as a 401(k), then contribute the max amount to the fund every year. You’ll be saving for retirement while also enjoy tax benefits that can save you even more money.
Take advantage of catch-up contributions. After you’ve reached age 50, you can stash an additional $6,000 per year in your retirement fund.
Consider a Traditional or Roth IRA. If you’re already maxing out your employer-sponsored retirement plan contributions, consider opening an IRA to save an additional $5,500 each year (or $6,500 for those over age 50).
Generate more cash flow. Obviously, it’s easier to save more money for retirement if you’re earning more money. A side income or home-based business of some sort could generate a few hundred dollars of extra income each month.
Consider a delayed or phased retirement. If you’ve really procrastinated toward retirement planning, you might not be able to retire as soon as you had hoped. But a phased retirement might be an option at your company. You could gradually reduce your hours (and pay, probably) and slowly ease yourself into retirement.
Reduce your debt. Debt is one of the leading causes for strained retirement incomes, and also one of the reasons many people can’t save more during their working years. Consider scaling back your lifestyle so that you can afford to better plan for retirement, and definitely don’t take on any new debts in the years leading up to your target retirement date.
Meet with a financial professional now. Hindsight is 20/20, so don’t wait until the eve of your retirement to meet with a financial planner and discover all of the things you “could have” done. Discover those things now! We can help you identify potential strategies to get caught up on your retirement savings and pursue a more secure future.
By the way, even if you aren’t trying to play “catch-up” with your retirement savings, we believe anyone can start saving more for retirement.
Investing involves risk including loss of principal. No strategy assures success or protects against loss.