You started out with the best of intentions. You meant to start contributing to your 401K right out of college, but you were trying to put all your extra money to paying down your student loans, and suddenly you’re almost 40 and your retirement savings are woefully low.
Or maybe you got laid off from your job when you turned 50 and you had to borrow from your retirement fund while you looked for a new job. Or perhaps when you turned 60, the stock market crashed and took your investment portfolio down with it.
There are all sorts of reasons you can fall behind on your retirement savings. But it doesn’t have to be the end of the world.
With the right strategy, you can start saving again and work on building a cushion. Here are some smart savings strategies to adopt in your 40s, 50s and 60s.
40s: Set New Financial Goals and Adjust Your Savings
Too many people have unrealistic expectations for retirement to begin with. If you’re starting late, talk to a retirement specialist who can help you set new goals. Having the same standard of living in retirement that you enjoy now may not be realistic if you just started saving. But you can prepare for a lower income in plenty of time if you take the right steps. Begin ramping up your savings by:
Maxing out your 401K contributions from your paycheck, which will also take advantage of any employer match
Paying down your non-mortgage debt, focusing on the bills with the biggest interest
50s: Start Tracking Your Spending and Your Risks
If you don’t already budget your money, now is the time to start. Most people in their 50s have disposable income. You may be flushing it away on entertainment and non-necessities. More careful living can give you more to put in your savings account. Track every penny you spend, and increase what goes to your savings. You can also:
Talk to a financial advisor about how much risk you should take on — the closer you are to retirement, the less you want
Direct money toward your savings, not your kids’ college accounts, because they have a lot more options for paying for school than you do for paying for retirement
60s: Make Small Adjustments
You can still save for retirement in your 60s. People live longer these days, and so you need to be ready to fund a longer retirement. You can put it off by working for longer, to build up your account and put off collecting Social Security. Other key steps you can take include:
Open an IRA and contribute the maximum, in addition to funding your 401K
Take a look at your Social Security allowance to see what you’ll be working with, and plan accordingly
It can feel scary to get to your 40s and beyond without a lot saved for retirement, but it’s never too late to start. Want more tips for planning for the future? Get in touch with Jay today to discuss the many options available to you.