“Better late than never” applies to many things in life, including and maybe especially saving for retirement.
Even if you’re past the halfway mark to your retirement and haven’t yet started saving, there are steps you can take to make up for lost time so you can live out your golden years comfortably.
Among non-retired adults in 2021, a quarter didn’t have any retirement savings, the Federal Reserve says. So, you’re not alone in not having started saving, and there’s no need to panic, advisers say.
“Homelessness is out of the question if you do something about it right away, but you have to be realistic,” said Brian Severin, senior executive vice president at Mutual of America Financial Group. “The biggest takeaway is setting a realistic expectation. Likely, if you’re 55 and have debt and haven’t saved, you’re not going to spend your retirement traveling the world.”.
Since you’re starting later, consider pushing your retirement date later to give yourself extra time to build your nest egg.
“By waiting till you are 70 years old to file, you can also maximize your (social security) benefits,” Dan Simon, retirement planning adviser with Daniel A. White & Associates, said. “Consider a hybrid retirement to do this – part-time work after you retire from your main occupation.”.
Calculate Correctly:Don’t be caught off guard by unexpected expenses: Here are 3 retirement assumptions that could leave you broke.
Tax Considerations:Near retirement? Here are 4 ways to lower your tax bill and hold onto more money.
Work To The End:Planning to keep working in retirement? Your body may have a different plan.
How do I start saving for retirement?
First, create a plan that’s achievable and that will allow you not to work at some point, advisers say.
You can try to figure it out on your own, but mapping out a plan can be complicated. You need to consider taxes, and what types and mix of investments will maximize your returns, and social security, if you’re eligible. If you decide to seek out professional help, use a fiduciary who’s legally bound to work in your best interest. Make sure, too, to check advisory fees and compensation to keep your costs low.
Either way, you’ll have to “work backwards to see what the gap is for what you’ll need to ensure some level of living,” Severin said.
To do that, first figure out how much you’ll need each year to live a comfortable, if not extravagant, life and inventory what you already have such as a home, life insurance policy, money in the bank, or savings bonds you might have forgotten about.
Easing Into Retirement:Partial retirement can help you prepare for leaving the workforce. Here’s how to do it.
Don’t Underestimate:Gen Z expects to retire by 63 but underestimates how much money it will need to live on.
Then, calculate how much you need to save from now until you retire to achieve that annual goal. Also, assume you’ll live a long life. With breakthroughs in medicine and technology and better nutrition, people are generally living longer.
“Ninety (years) covers the vast majority of people,” Rob Burnette, chief executive, financial adviser and professional tax preparer at Outlook Financial Center in Troy, Ohio, said.
Once you know all of that, you can start taking the steps you need to make it happen.
What steps can I take to save for retirement?
Waiting For Calm:45% of young workers say they’re waiting until ‘things return to normal’ to save for retirement.
Planning:Does the 4% retirement rule still hold true? Here’s how to make it work right now.
If you implement these guidelines, advisers say you can still manage to retire comfortably. But the key is to do so immediately to try to save enough to maintain 100% of your pre-retirement income or as close to that as possible for each year you’re no longer working , Burnette said.
“If you want a large shade tree, the best time to plant it was 20 years ago,” Burnett said. “The next best time is today.”.
Medora Lee is a money, markets and personal finance reporter at USA TODAY. You can reach her at [email protected] and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.