You’ve heard your whole life that you should be saving for retirement, but when you’re young, it’s easy to push that thought aside in favor of more immediate expenses. Plus, that age seems so far away when you’re in your 20s and 30s. Now you’re in your 50s and feeling that it may already be too late, but that’s not the case. It may take a bit more effort and strategy, but it is still possible to save for retirement.
It’s Not Too Late
It’s natural to feel overwhelmed, but the first step is to remind yourself that it is not too late. It may seem like an impossible task to save for retirement at this stage, but with the right approach and dedication, you can make it happen. Also, many employers offer retirement savings plans, such as 401(k)s or 403(b)s. These plans allow you to save pre-tax money and your employer may match a portion of your contributions. It’s important to take advantage of these benefits if you can.
Things To Consider
When planning for retirement, there are a few things you should consider. Look at your current situation first and decide how much you can afford to set aside each month. This may involve cutting back on certain expenses (such as eating out or entertainment) and allocating the money towards your retirement savings. Consider the type of investments you want to make with your money and how much risk you are comfortable taking.
How To Save for Retirement After 50
Once you have a plan in place, start taking some specific steps to save for retirement:
Create a Financial Plan
The full retirement age of 67 is not that far away when you’re in your 50s. It’s important to create a plan now that will help you reach your retirement goals. Take a closer look at how much money you’ll need and when you think you may want to retire. Calculate how much money you need to save each year, and take the steps necessary to make that happen. We recommend that you do not factor Social Security into your plan. It will be better to create your financial plan without your future Social Security benefits because these benefits can be viewed as a bonus if you have enough money saved.
Eliminate as Much Debt as Possible
Debt can put a tremendous financial burden on you and your retirement savings. Pay off any high-interest-rate credit cards and loans that you have first. By doing this, you can have more money that you can use to save for retirement. If you are not able to pay off your debt immediately, we recommend creating a plan to make regular payments that allow you to still save. Eliminating as much debt as possible can create more financial flexibility.
Make Regular Investments
With the right financial strategies, investing can be an opportunity to grow your wealth over time. However, some individuals aged 50 and above often lack that luxury — if a bad investment decision is made with little knowledge of the market, they may not be able to recover their losses. To avoid having this happen to you, arm yourself with the proper resources on the fundamentals of investing, observe long-term approaches rather than those claiming instant returns, and seek professional advice where necessary for assistance on how to make sound investments. Be aware of any fees associated with trading and the investments you make.
Diversify Your Portfolio
When saving for retirement in your 50s, diversifying your investments will be a critical piece to your progress. This means investing in different types of stocks, bonds, mutual funds, etc. A diversified portfolio can help you manage risk and better reach your retirement goals. Think about investing in index funds that track major market averages rather than trying to pick individual stocks. This can allow you to invest a larger sum of money without taking on too much risk. You may also want to diversify your portfolio across sectors and geographic regions so that you don’t have all of your money in the same place.
If you are feeling overwhelmed because you are starting to realize that you have not saved enough for retirement, it is important to remember that it is never too late to start. With the right plan in place, you can reach your retirement goals even if you are starting later than you would have liked. Prioritize saving for retirement and make changes in your spending habits to ensure you are setting yourself up for long-term financial success. With dedication and a positive attitude, you can have the financial security you need when you retire. Roberts Tax and Retirement Planning can help you take the next steps in your retirement savings journey. Contact us today to get started.