The phrase “better late than never” has never been more true than when it comes to saving for your retirement. However, it’s important to note that waiting to save will considerably affect the type of life you can expect to live post-retirement.
For baby boomers, a glimpse into their idea of life during their golden years is not accurately represented in their retirement savings accounts. Only 79% of baby boomers are contributing to a retirement savings plan at all, which may not seem that bad, but take a closer look: 50% of those people have only saved around $100,000 while one third of them have barely even saved $50,000.
If someone retires at the age of 65 and lives well into their early nineties, that money is not going to be enough of a safety net. If you are part of the baby boomer generation and either haven’t started saving for retirement at all, or have only been contributing a small amount of money every month, there are a few ways that you can amp up your retirement savings so that you will be better off after retiring:
Start putting more into a workplace retirement plan or IRA.
The language of 401(k)s or 403(b)s is foreign to many of us. Talk to someone in your company’s human resources department to find out how you can take advantage of making the most out of your contributions. In one year, you can devote up to $18,000 to one of these plans. For individuals over 50 years of age, you are allowed to contribute an additional $6,000 on top of that! Due to your budget, you may not be able to provide the maximum amount of funds, but contributing as much as you can will be beneficial to your financial future. And of course, if your company is willing to match your contributions, make sure to utilize those resources for yourself.
Pay off your credit cards.
This may require that you focus some of your extra money on settling any credit card debt you may have accumulated over the years before you can put any additional money into a retirement plan, but that’s okay. Your post-retirement plans are going to take a huge hit if you choose to pay off your debt later in life.
Think about downsizing ahead of time.
44% of baby boomers plan to downsize their homes and lives after they retire. My advice? Consider purchasing that smaller home while you are still working. All of this extra income you can save by paying a reduced mortgage while you are still working is money that can be invested into your future instead.
Your retirement may have seemed a long way off for most of your life, but, now, it’s right around the corner. If planning for life post-retirement seems rather complicated and overwhelming, consider hiring a financial advisor to guide you through the process. Contact me with any questions you have and I would be happy to start you on your way to a more stable financial future!