02.05.2024 By Carolyn Pemberton

Late Start in Saving for Retirement

Sometimes when we face a specific decision all the best advice guides us in a certain direction. Everywhere we turn, we hear, read and see the same recommendations. We know it’s a good advice, but at the time we just need to make another choice more suitable for our current situation.

Sometimes when we face a specific decision all the best advice guides us in a certain direction. Everywhere we turn, we hear, read and see the same recommendations. We know it’s a good advice, but at the time we just need to make another choice more suitable for our current situation.

Perhaps this describes your journey to save for retirement. In your 20s and 30s everyone encouraged you to start saving for your retirement. Yet at the time you simply didn’t save, or you didn’t save as much as was recommended. You may have been financially unable to save or you chose to save for other things such as education or a home.

Here you are now, in your 40s or 50s and you want to begin or increase your saving for retirement. That’s great. Let’s not wait any longer. Let’s explore the steps you can take now to save for that day when you want to leave the work world behind.
  1. Figure out how much you can save. Check out this podcast episode about using the America Saves Spending and Saving Tool to get a clear view of your finances. The information presented will help you understand your full income and expenses picture – so you can see exactly how much you are able to save.
  2. Calculate how much you will need to save for retirement. Think about what kind of retirement you want and what it will cost to maintain that lifestyle. Check out America Saves’ 6 Steps to Jumpstart Your Retirement Savings.
  3. Change your income or expenses. If what you are able to save is not enough for what your calculations indicate you will need in retirement, then you can look at your spending and saving plan and make changes that are right for you. You can decide if there are expenses you can reduce or eliminate to free up more money to save. Or do you want to explore ways to bring in more income – a new job, a part time job, or some type of gig economy job.
  4. Take Full Advantage of an Employer Match. If your employer offers a retirement savings plan such as a 401(k) or 403(b) find out if they provide matching contributions. Then make sure your own contribution level is at least as much as what your employer matches. For example, if your employer will match the first 4% of income you contribute, make sure you are contributing at least 4%/ It’s a guaranteed 100% return on your investment.
  5. Take advantage of any catch-up contributions allowed by the IRS. Individuals who are age 50 or over at the end of the calendar year can make annual catch-up contribution. Check out the IRS website to understand how much you are eligible to save and what are the current year limits. When you are able to find room in your Spending and Saving Plan to contribute more to retirement, the IRS makes it possible to save above and beyond the usual limits.
  6. Try to avoid taking on any unnecessary debt. The less debt you have, the more money you’ll have to save for your retirement. See if you can prioritize the future over immediate wants and needs. Your future self will thank you if you choose to delay some discretionary purchases for the purpose of saving for retirement.
  7. Save any unexpected cash. Receive a bonus, tax refund or some other type of one-time windfall. Put that money into a retirement or investment account – one that is outside of an employer provided retirement account.
  8. Consult a financial advisor. An advisor can help you create a savings strategy for your unique situation, taking into account your Spending and Saving Plan and the vision you have for your retirement. Check with your financial institution or retirement saving plan provider as they may have planners on staff that you can consult. Be sure you understand if there are fees associated with using the advisor.

Even if you didn’t start saving for retirement at what many say is the ideal time to start – you know the earlier the better – you can still plan and save for that nest egg. Starting today you can embrace those steps you are now ready to take.

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