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Saving for Retirement Late in Life: Tips for Success

Theoretically, you’re supposed to start saving for retirement in your twenties. But not everyone is in a position to do that—and for some people, unexpected personal disasters or stock market crashes can wipe out retirement savings no matter how carefully they saved. If you’re building—or rebuilding—your retirement savings later in life, here are a few tips.

Get a handle on your expenses. First, add up everything to figure out how much, exactly, you need to retire. Start with the big monthly costs: like your mortgage or rent and health care costs. Then add up smaller recurring monthly costs like utilities and car costs. After that, figure out approximately how much per month you spend on groceries and other necessities that can vary by month. Once you’ve done that, you’ve got your baseline spending to meet the bare necessities. But you’ll still need to factor in an estimate of how much you’ll need in order to have a decent quality of life—extra spending money for holiday presents, dinners out, movies, hobbies, and the occasional vacation.

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It’s not easy planning for retirement—even when you’re younger. When the time gets closer for retirement, planning gets even harder. But it’s never too late to do something to improve your situation.




Figure out where you are with income. How much will you have coming in? Factor in your social security payment—this can vary depending on how long you’ve worked and at what age you plan to retire; you can estimate your payments at the government social security website. Include the amount of retirement income you’ll likely receive from your workplace retirement account, your IRA, and other retirement accounts. If you’ve accumulated some investment income, add about 5% of that, or one-twelfth, to your estimation of monthly income.

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Once you’ve done that, you can figure out exactly how much you need each month, how much you can expect to receive each month, and how big your shortfall is. Knowing this can help you put aside more in savings, assess your spending habits to figure out if there’s anywhere you can cut expenses, and determine at what age you’ll be able to retire. But there are also a few financial steps you can take.

Use the catch-up provision. If you’re starting to save at age 50 or older, you can contribute more money tax-free into 401(k)’s and Roth IRA’s. Contribute the maximum amount you can to each type of account, plus the catch-up amount. This increases yearly and varies depending on the type of account you have.

Pay off your debt. The more debt you can pay off before retiring, the better. After contributing as much as you can to your retirement accounts, start to tackle your debt aggressively. Get rid of credit card bills, car loans, college tuition bills, and other debts—paying off those with the highest interest rates first.

Talk to a financial advisor. You’ll likely need to sit down and talk to a financial advisor to identify the investment strategy that will work best for you this late in the game. Many younger people invest aggressively because they have more room to recover. But as a senior, you don’t have a lot of time to recover from fluctuations in the market. Even so, a fully conservative strategy may not provide you with the type of returns you need to reduce the gap between your monthly expenses and your expected retirement income.

Consider working longer. Staying at work longer could help you make ends meet when you’re retired. Consider whether it’s possible for you to move into a less demanding role rather than retiring completely after a certain amount of time—maybe you could serve a consulting role or take on a part-time position.

It’s not easy planning for retirement—even when you’re younger. When the time gets closer for retirement, planning gets even harder. But it’s never too late to do something to improve your situation. Follow these steps, and you should be on your way to developing a retirement plan that will fill in the gap between your earnings and expenses—and keep you secure in retirement.