There are retirement planning strategies you can do right now that can make a difference, no matter when you start.
Help! Is It Too Late to Start Retirement Planning?
When we first start out in the workforce, retirement typically seems far, far away. Many people don’t start actively investing in savings with competing demands for every dollar. Then the years go by, and they suddenly find themselves in their forties or even fifties with a fear that they might be too late. The good news is that it’s not. There are retirement planning strategies you can do right now that can make a difference, no matter when you start.
This tip can seem obvious but it’s where many people get stuck. Fearing they’re beginning too late often causes people to feel overwhelmed and thus paralyzed to act. They put it off, and more time passes. Instead the best way to start retirement planning is simply to start. Sit down, evaluate the numbers and start putting money away, even if it’s just into a savings account. By starting today, you’ll have more than you did yesterday, and more than you did if you never began at all. Just do it.
Save as much as possible – in the best way possible
Another factor that triggers fear in late starters is that they will never be able to save enough. But it’s important to not let that stop you. Saving $500 a month in an account with 6% return over the next 15 years can result in more than $145,000. If you can double that, you’ll accrue more than $290,000. Then, based on a 4% withdrawal rate, that investment would produce just under $12,000 a year in retirement income, which can be a good supplement.
Finding that extra $500 or $1,000 a month to start saving for retirement will likely involve cutting corners where you can. So, it’s time to think: Do you need that new car? Can you wait on that next exciting purchase? How much are you spending every day with really nothing to show for it? Committing to retirement goals calls for looking honestly at your lifestyle and making trade-offs where you can. You may find that savings quickly add up by just making some basic lifestyle changes:
This of course means lifestyle changes before you retire that can have the most benefit later. There are also lifestyle changes you can make after you retire that can result in your retirement savings going further. Some retirees supplement their income with a part-time job. This not only takes the edge off spending, but it can keep the mind engaged and active. Another thing to consider is retiring somewhere new that has a lower cost of living. By downsizing and relocating you can reduce expenses and help your savings go further.
Give yourself more time
If you started late in saving, another strategy is to add more time to the backend for more saving. For many people, 65 is the target age for retirement, but aiming to stay on the job till 70 has its benefits. Social security benefits increase if you wait to start receiving benefit payments. This means you may be able to increase your social security payment just by working a little longer. Retiring later also gives you more years to invest in your retirement accounts – and fewer years in which you’ll be drawing down from them.
Consider a financial advisor
Finally, if you’re late to the game of saving, it may be an ideal time to call in an expert. A financial advisor can help you hone-in on aggressive strategies, with more insights than you might have on your own. Look for a consultant who is familiar with retirement investments and who does not charge an exorbitant fee.