25 Apr Saving for Retirement for Late Starters
When it comes to retirement planning, many financial advisors recommend saving at an early time in life in order to let your investments grow progressively. However, if you’re already in your 50s and haven’t started, it’s not too late. In fact, you shouldn’t feel bad if you’re a late starter since there are many other Americans also playing catch-up on their retirement savings.
If you are one of those worried late starters, here are 5 helpful tips to help you get on track and begin saving for retirement in no time:
1. Start saving right away.
The most important step in saving for retirement for late starters is to simply start right now. The less you procrastinate and the sooner you begin, the more you will be thanking yourself. The first step to making savings a priority is to start saving at least 10% of your gross income.
You can either do this by paying a down high-interest-rate debt that is not tax-deductible. Or you can simply set aside funds by taking advantage of your employer’s 401(k), which has a great amount of mutual-fund options. By exploiting as many tax efficient plans as possible, you can increase your savings amount.
2. Think about downsizing.
For those who are retiring, housing costs are one of the biggest expenses. Even if your house mortgage is paid off, it can be beneficial to downsize to a condo or apartment because of the constant property and utility costs associated. Even investing in a rental property can make a huge difference.
Downsizing your car is also a smart way to save up for retirement. A smaller and more efficient car that doesn’t use a large amount of gas can reserve a lot of money and stress. These methods of downsizing can generate additional cash flow, assisting your retirement savings in the long run.
3. Avoid being too risky or too conservative.
Be sure to know your limitations because taking too many risks and experimenting with your future can be detrimental to your savings. Testing your grounds is a bad idea, but you should also not be too conservative with your money either.
Protecting too much of what you have, investing it in money market channels, or holding money in cash are unfavorable methods. These routines will be weakened by inflation over time, causing you to save less money than you planned.
4. Put off collecting your Social Security.
Delaying your Social Security (SS) for as long as you can is also really important for late starters. This will provide you with a multitude of advantages because SS is one of the best systems of retirement income. Try to put it off until age 70, but once you turn 70 years old, you should undoubtedly begin to collect your SS. Nevertheless, remember the bigger your SS income, the more at ease you will be later in life.
5. Aim to work a little longer than expected.
Pushing back retirement by one year can have an immensely helpful effect on your savings. Therefore, it is feasible to aim to work a little longer than expected. By waiting one more year, you can slow down collecting your SS, grow your account, and delay living off of your retirements savings. Ultimately, the more time you wait, the more money will accumulate in those savings to last you perpetually.