There are millions of Americans over 40 who have little to no savings for retirement, but this is no reason to worry. It is never too late to start saving, as long as you realize that getting on the right savings track for a comfortable retirement will require some additional effort. Read on to learn more about a few financial management tricks.
Create a Financial Goal
You must begin by estimating how much it will take to help you live your best after retirement – which might be easier with the help of a retirement planning advisor. Get a ballpark figure as a starting point for your savings goals. After that figure is in place, find out how you’ll fill that gap. Look over what you already have stashed away after you reach retirement age. Do you expect to receive a Social Security stipend? Are there any available pensions? Do you have a 401(k), and what is it worth? Make sure to use conservative growth rates so you don’t overestimate how much you need to start saving. Set your financial goals after gathering all possible areas of income. This includes a plan for saving money from every paycheck to help fill the gaps left after retirement funds, such as Social Security, are dispersed.
Take it to the Max
If you’re over 40 and have no retirement plan, it’s time to go all in. Find out what type of retirement plan your employer offers, sign up immediately, then contribute the maximum amount allowed by law. Keep in mind that tax savings on deductions will help recoup some of this investment, if the higher amount seems overwhelming. Consider catch-up contributions, if they are affordable for you. Double check that any employer match programs are included in your retirement package. If extreme savings seems intimidating, look to Roth for help. A Roth IRA will grow over time, and are tax-free after retirement. Many people combine Roth IRA’s with 401(k)’s, but the best option is up to you. Remember, now is not the time to be conservative for a tidy sum after retirement.
Reassess Your Situation
Look around. Can you reduce your cost of living? If the kids have all moved away, can you move to a smaller, and cheaper, home? Can you take on a second job to build up savings faster? How much extra can you contribute toward loans or credit cards? What is more, it may be smart you to consider taking out a personal loan with low interest rates that will benefit you in the long run. This step could even help you pay off old debts and expenses that you’ve been dragging on for years.
Retirement is exciting and relaxing. Make it a fulfilling time of life, even if you’ve started saving for it later than your peers. Taking on extra savings accounts, reducing bills, and living for the future is the best way to gain as much as possible for a comfortable retirement.