Starting to save for retirement when you've reached your forties and there's little or no savings means you've got to start playing catch-up. No-one wants to reach retirement age and wait for a handout. Plus, retirement is supposed to be your golden years when you're starting to enjoy life without experiencing a financial crisis.
In today's unpredictable economy, you cannot count on Social Security to cover the bills and the cost of living will continue to rise. This is why it's crucial to start your financial planning now while you still have considerable time to reach your financial goals. This article gives five ways to plan smart for those next 25 or so years before retirement age.
Think More Aggressively
Having nothing or a minimal amount saved up means creating an even more aggressive financial plan to accelerate the amount of savings in an even shorter period of time. 20-plus years is still a significant period of time for growth and investment. This strategy may require reducing your expenses, maximizing tax-free savings accounts, downsizing, paying off bills faster and even putting aside an emergency fund.
Determining Your Resources and Options
At this stage of your life, you'll want to minimize financial risk and maximize your ability to save. By your mid-forties, you will need to start setting aside 20 percent of your income for retirement for financial priorities. One strategy is to max out your 401K or the savings amount through your employer. A second strategy is to max out all your tax-deferred retirement account options and consider contributing to a Roth IRA. If you aren't making enough money to set aside that magic 20 percent, consider taking on additional jobs if possible.
Realistic Approaches: Living Within Your Means
With fewer years left for your money to invest, it might be even more urgent and necessary to put vacations on hold until a saving plan is in place without skimping on basic necessities. Start saving on a small scale and build up amounts as you go.
Consider Postponing Retirement for a Few Years
Holborn Assets might be a good strategy if you've determined your retirement nest egg (the money you'll need to retire) is not enough to cover the bills.
How Much Money Will You Need to Retire?
Calculating your years left and how much money you'll need to live on minus expenses you may not be paying now including credit card bills, childcare expenses, and mortgage payments.
As you can see, age forty plus people thankfully still have some years to go until retirement and still see return on investments. With people living longer, these strategies can be maximized for the next twenty to thirty years until retirement. You may not be able to catch-up on those earlier years, but you can still move forward with a smart financial plan.