Worried about retirement because you started late?
We hear a lot about the importance of starting retirement savings early, but for those that are late coming to the ‘retirement savings’ dance, what do they need to do differently? Someone asked me that very question just yesterday. The answer for the most part is nothing. Whether you start early or late the desired results are the same…dignity during retirement. Unless you are going to inherit a retirement account (or you play the lottery), dignity means saving/earning enough money so that you can retire.
I receive Dave Ramsey’s “Investing Minute” newsletter. This month, Dave dealt with this very topic. The following three points are from Dave Ramsey, not me…although I agree with them 100%.
Delay retirement for two more years.
The more you work, the more you save. According to the Center for Retirement Research at Boston College, most people who work two extra years after qualifying for retirement can lower the amount of savings they need by about 25%. Plus, the extra income will be an added bonus!Get serious about investing.
Don’t give up. It’s time to put all you can towards your retirement. Even if you’re 40 or 50 and don’t have a retirement account, it’s never too late to start. If you are 40 and save just $2,000 a year in a 12% mutual fund, you will have nearly $334,000 by age 65—or more than $425,000 if you wait until 67 to retire! While you won’t have the most luxurious retirement, you can draw a decent yearly income—about $48,000—from the interest by leaving that money alone.Stay out of debt!
Think of all the extra money you could be putting toward retirement if you didn’t have those car payments, student loans, and ridiculous credit cards! The average car payment is $464 a month. You could be using that $464 to build wealth for the future, rather than putting it toward a vehicle that declines in worth every day. If you’re not “gazelle intense” about paying off your debt, now is the time to get started.
So where are you? Are you starting your retirement savings early in your career? Maybe you did start early, but the downturn in the economy has taken a chunk out of your nest egg. What are you doing to correct the situation? Remember, personal finance is your responsibility. The government cannot take care of everyone. Decide today to increase your retirement savings. If you haven’t started yet, then commit to getting out of debt, fully funding an emergency fund, and then start putting away money for your retirement future.
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