We’ve made it to the last week in this month’s series on retirement myths, and I have saved one of the hardest myths to stomach for last.
I just turned 50 and I don't have much saved for retirement, there's no point in starting now!
Many of my clients first seek financial advice in their 50s, because they have experienced significant changes in their lives. With children through school, homes paid off or nearly so, and peak earning potential, in my experience, they are often better off than they realized. My role is to help them prioritize by quantifying their goals and creating a plan to achieve them.
If you fall into this category of retirement savers a bit late for the party the first thing you need to know is that you are far from alone. The Federal Reserve issued a report in May of 2022 that showed that “25 percent of nonretired adults have no retirement savings and only 45 percent of nonretired adults ages 45 to 59 believe their retirement savings plan is on track.”1,2 The most important thing to know is that it is never too late to start saving for retirement. Here are some things you can do to make your situation even more positive than you feel it may be.
- Look for additional savings opportunities in your budget. If you tighten up your monthly budget there may be additional dollars available for retirement savings. Taking those “found” dollars and investing them through an automatic savings plan can help you get ahead on your path to retirement.1
- Pay down debt. If you can allocate additional resources to pay down any and all existing debt helping you to enter retirement as close to debt-free as possible you will be in far better shape than if you carry student loan or mortgage payments into retirement which could severely tax a fixed income.1
- Max-Out Retirement Savings. If you save for retirement in any type of employer-sponsored account it is in your best interest to increase the monthly allocation from your paycheck to receive the company match. If you have an IRA make sure you take advantage of the catch-up contribution amounts offered to retirement savers 50 and over.1
- Set up an Emergency Fund. Emergencies pop up all the time regardless of if you are retired or not. If you have money set aside and your refrigerator dies it's far less upsetting if you have some cash set aside that can pay for a new one.1
- Stay just a little bit longer. As we will discuss in blogs in the coming months, working even just a year or two longer than originally planned can increase both your retirement savings and your Social Security benefit.3 Remember, if you can hold off on claiming Social Security benefits until you are past age 65, up to 67 or 70, your benefit amount will increase. I recommend holding off as long as possible.3
Happy saving! And please feel free to reach out to me with any questions you may have if you are anxious about your retirement.
Until next time…
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The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested in directly.
All investing involves risk, including loss of principal. No strategy assures success or protects against loss. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
Dollar-cost averaging involves continuous investment in securities regardless of fluctuation in the price levels of such securities. An investor should consider their ability to continue purchasing through fluctuating price levels. Such a plan does not assure a profit and does not protect against loss in declining markets.