Sometimes, despite our best intentions, life gets in the way of our savings goals.
We can always try and make up for it, but in the arena of retirement saving, a late start can be even more costly.
Make up for that late start and retire the way you should with these simple guidelines!
When you’re young, saving for retirement seems like the easiest thing to push to the backburner when you have seemingly more pressing expenses at hand.
The reality, of course, is that the younger you start saving for retirement, the more money you have (by a LOT) and the earlier you can retire.
Now while that would certainly be the best-case-scenario-retirement plan, we all know that that’s not always what ends up happening.
Life can get in the way sometimes (a lot of times) and before you know it, you’re middle-aged, dreaming of the day you’ll retire, without ANY retirement savings.
I know what a nightmare that can feel like, so I’m here to reassure you that even if you’re past middle-age with nothing saved for retirement, all is not lost.
There are a few different things you can do to ensure you still reach your deserved retirement, but the first and most important thing you need to do is start saving immediately.
That may seem obvious, but every day you put off saving for retirement makes your situation even more difficult.
I know how easy it can be to think that one more day won’t make much of a difference, but those days add up!
Now, I’m not here to lecture you—believe me, I understand better than anyone how much life can get in the way of things.
I’m here to help you, and let you know that no matter how stressed out you are right now about your late start to retirement saving, we can still make it work for you.
As I said, first thing you need to do is start saving.
Now one of the best paths for retirement is a 401(k) through your employer, but if you haven’t started one of those yet I’ll assume it’s because you don’t have access to one.
If that’s the case, then no need to fret.
Instead, I would encourage you to open an IRA as your primary method of retirement saving.
To get the most bang-for-your-buck, make sure that you’re contributing the maximum amount each year.
Currently, that amount is $5,500 per year, with an additional $1,000 for individuals 50 years or older, which would bring your total contribution to $6,500/ year.
If you’re 50 years old and contributing the maximum amount each year, and earning 6%, then by 65 your account would be around $160,000.
That’s a nice chunk of change to be sure, but with today’s increased longevity we’re seeing people in retirement for 30 years.
Living off of $160,000 for 30 years will most likely not be enough to see you through retirement.
So, to make up for some of that deficit, you should seek out additional streams of savings.
Even if you can’t contribute any more to your IRA, you can still use a traditional savings account to accumulate additional wealth for your retirement.
Saving $12,000 a year (which would just mean putting aside $1,000/ month) and earning 6% would get you $300,000 by age 65.
If you’re able to increase those yearly savings even more to, say, $18,000/year, you’d be looking at a retirement fund of right around $440,000 by the time you’re 65.
Now 65 is on the younger side of retirement age, so you might’ve already been planning on working for longer.
Of course, the longer you work the more money you’ll have saved up, so that’s always a good idea.
Retirement is your reward after decades of working hard and marks the next part of your life.
That next part shouldn’t be spent worrying and fretting over money, no matter what age you are.
So, stop putting it off, and start saving today.
No matter how behind you might feel you are, it’s always possible to play catchup and live the retirement of your dreams!