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Ideally, saving for retirement when you are young is the best possible scenario to be in. Yet, that is not always the case for some people. There are many out there looking to retire but have waited to begin saving. It is never too late to start saving for your retirement and put yourself in the best financial situation possible. For those who have waited to save, here are some tips for you to begin your financial smart future.
Step 1 – Re-evaluate
You may have been planning to have an extravagant tour around the world to celebrate those long years in the workforce but this is the time to reconsider. Weighing the pros and cons between a big celebration and living comfortably on a daily basis is a big decision to make. If you have not been saving since your 20’s, chances are you a bit behind in your retirement saving.
Take some time to reevaluate your goals for retirement. Ask yourself if your goals are realistic compared to your “nest egg” and your anticipated Social Security benefits. There is always time to modify your saving plans before your retirement sneaks up on you.
Step 2 – Contribute & Cut
Once you have reevaluated and created a new plan, it is time to put it to action. A great tip would be to contribute more. You will need to catch up for the years you were not investing in your retirement. Making those late catch-up contributions can go a long way.
For example, if you are in your 50’s, you can contribute a couple thousand dollars into a 401(k) which has some tax advantages.
As well as doubling down on your investing, find ways to cut out unnecessary expenses. Some may even consider moving into a more affordable home by downsizing. As you find ways to make your life more affordable, anticipate the changes in your finances. Specifically, your changes in health care may increase due to leaving your employer’s plan to Medicare. An HSA may be an option to help plan for those costs down the road.
Step 3 – Flexibility
Flexibility is going to allow for the smoothest transition into your retirement. It is perfectly fine you waited to start saving late in your career but there will be some small bumps in the road along the way. You may need to work a bit longer than expected or step down to part-time work for awhile. In addition to bringing in income, you also be able to postpone Social Security which will give you high benefit amounts. A late start with saving does not mean you should give up, it means that you have to be committed and motivated to have a successful retirement.