Do you feel financially ready for retirement? If not, start saving now!
Easy ways to save for retirement when you start late.
Many people do not feel financially ready for retirement. In addition, there are many who have not even started saving for retirement. Michigan State University Extension suggests that if you find yourself in either category, keep in mind that it’s never too late to start saving for retirement. The three main things a person can do to jump start their retirement savings includes: starting immediately, reducing spending and redefining their retirement.
Begin saving money right away. Set realistic goals and create a plan. Explore saving vehicles that include compound interest, participating in employer retirement programs that offer matching funds and seeking tax-advantageous retirement savings plans. If you have additional money that you can invest, consider an employer sponsored pre-tax saving plan or opening an IRA, and be sure to look into the federal retirement savings law that allows additional savings for employees 50 and older, also known as catch-up provisions. Consider consulting a skilled financial planner who can help you assess all of your saving options.
Understand why it is important to reduce your spending. By changing your spending habits, you create additional opportunities to put more money into your retirement saving plan. Cost cutting can be on a large scale, such as downsizing a home and changing to a smaller or non-existent mortgage or forgoing a new car and keeping the one you have. It can also include smaller efforts, such as re-assessing your insurance coverage on an older vehicle (i.e. the type of coverage and the deductible amount) or cutting out everyday spending on items such as coffee or eating out, which can save you hundreds of dollars each year. The more you can save now, the better chance you’ll have of reaching an enjoyable retirement.
Last but not least, redefine your idea of retirement. Many people who retire fully find themselves looking for part-time employment to fill their time. By postponing retirement, you allow yourself more time to save, allow investments to grow longer and you increase your Social Security benefit. Another option to consider is a phased retirement from an employer versus a full retirement, which allows the opportunity to work part-time for several more years. For more information on this topic visit USA.gov.