Tips for Saving Late for Retirement
Are you late to the retirement saving game? Are you worried that you aren’t going to have enough money to even retire? That’s ok! It’s better to enter the game late than not at all.
Here are some of our tips for saving late for retirement:
- You may want to maximize the amount you are saving to your retirement accounts. Many retirement accounts, such as Roth IRAs have catch-up provisions, which meant that after a certain age, your contribution limits increase. Research the accounts you have, or would like to open and then consider what catch-up provisions they offer. Your retirement accounts may have limits, so it is important to make sure that you do not contribute more than the maximum amount.
- Downsize and eliminate all unnecessary expenses. This is a time to look very critically at your budget and expenses. If you are an empty nester, maybe you should sell your home and downsize to something smaller. but your utility expenses should go down as well. Consider your monthly and daily expenses, is there anything that you can cut? Do you subscribe to magazines or online sites that you could do without? Don’t jeopardize your future with current wants.
- Consider working longer at your current job. If you enjoy your work and company, or at least can handle working there longer than you expected, consider staying. You don’t necessarily need to work full-time either. You may want to speak with your employer about reducing your hours as you scale into retirement. It might not be your ideal situation but it will help you catch-up on your saving.
- Figure out a way to continue to get cash-flow once you stop working. Do you have a hobby that you could get a little extra money from? Consider selling your work to get a little extra cash. Or you could offer lessons to teach your hobby to others. You could freelance part-time. You don’t have to give up making money once you retire. If you do pursue this option, make sure to consult your tax advisor for advice on how this income may affect your taxes.
- Try to reduce or eliminate debt. Debt will eat away at your savings. Consider reducing your debt as much as possible.
- Don’t spend your raise. If you get a raise at work, try not to increase your expenses but rather save the extra money you will now receive. One stipulation may be if you are increasing the amount you spend for paying down debt.
- Consider a new job. Saving late may require working longer. If you really don’t enjoy your job, maybe consider something new. This may keep you happier while still bringing a consistent revenue stream.
- Reassess what retirement means to you. If you believe retirement is your opportunity to pursue a different career, then fretting about retirement savings may not be an issue for you. You may only need enough saved up for 1-3 years, instead of 20-30. Some people don’t plan on giving up making money in retirement, they are just giving up a particular career path.
- It may be time to move. Evaluate your current living situation and decide what is keeping you in your current house and city. If you feel it would be a smart decision, you may consider moving to another city or even state that has cheaper living expenses.
- Convert your assets for liquidity. Maybe you have some antiques, jewelry, or art that is worth something. Consider selling these items and move the cash into your retirement accounts. This may offer higher growth rates than keeping them as non-liquid assets.
- Evaluate how much you spend on account fees. Research what your current fees are for your financial accounts. Most banks and other financial institutions have fees for handling your money. Consider what your current rates and fees are and see if there are similar options that offer better rates.
- Get your kids off your house-hold budget. If you are serious about saving for retirement, you should consider cutting your children loose. You may be helping cover financial debt, or helping them pay bills. If you can’t afford to retire, you will be doing yourself and them a disservice. Remember, your children have more time than you. Helping them out of a financial burden could only worsen your own.
- Assess whether you are ready for retirement or not. Have you done a thorough investigation into all the different accounts you (and your spouse) have for retirement? Do you know your net-worth? Have you calculated how long that money will last? Have you consulted with a professional about these questions? If not, you may find that you have more money then you thought for retirement. It’s worth at least investigating.
- Reduce your taxes in retirement. Taxes are an expense that can be easily forgotten, especially if you are no longer working, but they don’t just disappear in retirement. You still file your taxes by April 15th like everyone else. But, you can figure out strategies for reducing your taxes in retirement, whether it’s working with a CPA to make sure you are getting the most deductions each tax year or finding a financial advisor that positions you to pay less taxes on your retirement accounts before you reach retirement.
At GuideSpring Wealth Strategies, LLC, helping our clients work towards the retirement they dream of is our goal. We specifically offer retirement financial planning that focuses on helping reduce the tax burden that retirees face. But we also help investigate your current situation and find opportunities for financial growth that you may not have known. If you are looking to retire soon and aren’t sure if you can, let’s talk.