Getting a Late Start?

Everyone knows that when it comes to saving for retirement, the more time your money has to potentially grow, the better off you may be. However, it’s never too late to start! So if you’ve put off preparing for retirement and are afraid it may be too late, don't panic. You can still make solid progress toward your financial goals if you make the effort now. The following tips will help you on your way.

Get Started Right Away!

Forget the past. Your retirement planning begins today. By making the right moves, you can lay a foundation for a more financially secure future. Doing something to save for your retirement is always better than doing nothing.

Make the Most of Tax-Advantaged Plans

If you have access to a retirement plan at work, make sure you take full advantage of all the tax benefits it offers. Contribute enough to get the full amount of any matching contributions.1 And if possible, contribute the maximum amount allowed. If you’re age 50 or older and participate in a 401(k) plan, you can save an additional $5,500 as a catch-up contribution. (403(b) and 457 plans may offer catch-up contribution provisions as well.2)

After you've put as much as you can into your workplace-sponsored retirement plan, look into other savings plans you might be eligible for, including traditional Individual Retirement Accounts (IRAs) and Roth IRAs.

Finding the Money to Save

To help find more money to contribute, take a look at your current budget and expenses. What are you willing to give up today to make an investment in your future? There are some obvious possibilities—the daily gourmet coffee, eating out, paying off credit card debt. Dig deeper to find more—for example:

  • Raise the deductibles on your homeowners and car insurance policies
  • Cut back on your cable and/or Internet service
  • Find a cheaper cell phone plan
  • Drop your gym membership (and exercise at home)
  • Cut your dry cleaning bill by washing certain garments at home
  • Pay your bills online instead of by mail (saves you time and money)
  • Keep your car longer
  • Reevaluate your life insurance needs to see if there are cheaper alternatives
  • Sell some possessions that you no longer want or need

Invest the dollars you free up in your retirement plan account. You don't have to give up all of life’s luxuries—but making some adjustments here and there and contributing the amount saved to your retirement plan account can make a big difference over time.

Invest More Aggressively

With limited time to save for retirement, you may need to step up your investment strategy a bit in order to reach your goals. Consider allocating a larger percentage of your retirement dollars to stock funds, which may offer greater potential for return. This may expose your portfolio to more volatility, but if your money is invested too conservatively, your account may not be able to keep up with inflation.

Rethink Your Retirement Goals

If you're getting a late start to saving for retirement, you may have to revise your retirement income goals accordingly. In addition:

  • You may wish to consider delaying your retirement by a few years to give yourself more time to save. The longer you work, the more money you can save and the fewer years you’ll have in retirement that you’ll need to finance.
  • Working during retirement—at least part-time—is also an option as another potential source of income.3

Monitor Your Progress

Once you have a plan in place, check in on it at least once a year to see how you're doing, and make adjustments as necessary. Keep at it. Even though you may have gotten a late start, it's never too late to start planning for a better future. Make the most of the time you do have.

1 Based on plan provisions; not available with all plans. Check with your plan administrator for details.

2 Based on plan provisions; contact your plan administrator for more information.

3 The 2011 Employee Benefit Research Institute survey revealed this to be a popular option: 74% of those surveyed indicated they are planning to work after they have retired. (This compares to 70% who reported the same in 2010.)

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