Lack of savings are causing issues for many Americans in retirement. In a study conducted by the Insured Retirement Institute found that only 54 percent of baby boomers (adults in the 53 to 71 age range) have retirement savings. Many adults in Gen X (over age 50) have little to no retirement savings.
If you find yourself in the position of having less in your retirement savings account than you need for the retirement lifestyle you want, it isn’t too late to start saving to meet your goals. Rather than pursuing a series of linear goals, such as eliminating debt before you start saving, consider ways to accomplish multiple goals at the same time. Here are 8 steps to take to if you’re a retirement late-starter.
1. Get past your fear by adopting a new mindset.
Instead of thinking “I wish I would have started earlier,” focus on the future. Dwelling on the past can exacerbate your fear. Positive and empowering thoughts might not dispel all of your anxieties, but it’s crucial to remember that any savings is better than nothing and starting late is better than never starting at all. Don’t spend too much time considering would-haves and should-haves; these will only keep you stuck and cause fear of savings failure.
2. Avoid retirement calculators until later.
Stay away from calculators if you haven’t saved for retirement by age 50. If you’re behind where you want to be, savings calculators can reinforce just how behind you are, which will lead to the same fear of savings failure that keeps you stuck.
Instead of focusing on calculations, take a closer look at your own budget. Plotting out monthly expenses can help you figure out where you’re overspending and how you can cut back.
3. Catch up by executing multiple strategies.
The best way to quickly add to your retirement savings isn’t by simply adding more money to your savings. Instead, explore your options. Consider making use of “catch-up” rules, which allow people 50 and older to put an extra $1,000 into their IRAs and an extra $6,000 into their employer-sponsored retirement plans.
At the same time, you might want to look into downsizing your home, which may reduce or eliminate your mortgage payment, and automating your investment deposits. Combining these strategies will have a greater impact than simply adding to savings alone.
4. Reconsider your retirement plans.
Though early retirement gives you lots of free time, there are also benefits to working past the common retirement age of 65. Many people find that they enjoy better health longer and are able to work longer. Additionally, people who work longer and remain social tend to live longer.
Other benefits to working until a later age are that this gives you more time to put money into an employer-sponsored retirement plan or IRA, higher Social Security benefits than you would get by claiming in your early to mid 60s, and possibly even higher pension benefits. Delaying retirement account withdrawals also results in payoffs.
5. Enter the digital age.
Make use of apps such as Digit, Qapital, Acorns, and Stash to increase your automated savings.
6. Generate income beyond your investments.
One of the benefits of growing older is that you become more experienced in your field. If you have years of experience in your career, make sure you’re earning your worth and if you’re not, ask for a raise.
Additionally, consider a part-time job to generate more income. If you have a special or unique skill, consider starting a side business at home. An experienced CPA can also show you ways your side business can reduce your taxes.
Selling those unused items taking up space in your attic or basement is another way to earn money beyond your career and investments.
7. Expect the unexpected.
Unexpected events can sabotage your retirement savings. You may want to consider purchasing long-term care or disability insurance to cover any unexpected costs that crop up.
8. Finally, use a retirement calculator.
Once you rework your retirement plan and adjust where and how you’re going to save money, use a retirement calculator to gauge where your savings are at. Choosetosave.org’s Ballpark E$timate is a reliable retirement calculator.