In today’s hustle and bustle world, it seems like we are constantly in “catch up” mode. That uncomfortable feeling is no more troubling than when it is associated with our retirement plans. In an ideal world, we would all start saving for retirement in our 20s and continue that trend throughout our lives. But this is not a perfect world.
If you’re over 50, then you’re probably beyond troubled – you’re heading toward “panic mode.”
But you don’t have to be. There is still time to get on track with your retirement preparations.
A word of caution: don’t get discouraged or overwhelmed as you start looking at the work you need to do to catch up on your retirement. It is time to get deadly serious, but you can perhaps take solace in knowing that you aren’t alone. Nearly a full one-third of Americans aged 55 or older lack sufficient retirement savings. Just roll up your sleeves, dive in and get the job done.
The first step is to assess what you’ve got. You’ll need to do a little math, figuring out your net worth at the moment and the net worth for retirement that you’re shooting for. Once you have these figures firmly in hand, you can start taking the steps necessary to get you caught up on your retirement contributions and planning.
Catch-up Contributions Are Our Friend
One of the perks of being over 50 is that you can contribute thousands of dollars more into your 401(k) plan than your younger counterparts. If your employer makes contributions on your behalf, anything made by them over the annual limit is pure gravy for you. But you don’t have to stop there. You can make a catch-up contribution to an individual retirement account. The amount here may be based on your adjusted gross income, and you’ll need to be aware of the differences between a 401(k) and a Roth IRA.
Rein in the Spending
It’s a hard lesson to learn and not a fun one at that, but there’s no getting around the truth: The best way to save more is to spend less. Working on living a lower-cost lifestyle will allow you to save more now, which will translate to needing less in your retirement.
Your chances of achieving your goals increase dramatically when you understand your available choices. Read books and financial magazines, or attend finance management classes to learn ways to invest smarter and save more for your retirement. Learn the rules associated with retirement accounts and the rule changes you’ll face as you hit specific ages. Never underestimate the help a professional retirement planner or specialist can offer.
Take a Look at Your Career
If you enjoy your work, consider doing it for a longer period of time. If you’ve got your heart set on retiring by age 60, you’re going to need a larger retirement nest egg than you would if you continue to work to age 65 or 70. If you’re not so career oriented, look for ways to earn some extra money using your hobbies or a particular skill set you maay possess.
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