10 September 2014
Is It Too Late to Save for Retirement? Playing Catch-Up with Your Future


You never thought you’d be here – looking at retirement and wondering how you’ll get by. The numbers, published by the U.S. Department of Labor’s Employee Benefits Security Administration (EBSA), are sobering*:

  • Fewer than half of all Americans have even calculated how much they’ll need to save for retirement. Have you?
  • 30% of private industry workers with access to a 401(k) don’t participate, risking future security in retirement. 
  • The EBSA estimates that you’ll need at least 70% of your pre-retirement income to maintain your standard of living.
  • The average retirement lasts 20 years, and each year inflation increases the cost of living. Many Americans have a retirement nest egg, but will it be enough to provide a secure retirement for two decades?


So, if you’re in your 40s or 50s, and looking forward to the years ahead, will you have saved enough for a comfortable retirement? If not, are there steps you can take to improve the likelihood of enjoying your Golden Years, even though they may be 25 years in the future?

Fortunately, there are. Here are some suggestions to get you on the right savings track to a more secure retirement.

Building a Nest Egg

There are three elements of saving to consider: (1) the amount you can save from current household income; (2) the length of time you have before you retire; and (3) the rate of return you’ll get on your invested retirement money.

The more years retirement savings have to grow, the bigger the nest egg.  It’s easier to save a little from each paycheck over 30 years than to invest larger amounts as retirement approaches. Put away as much as you can each month – even if you have to scrimp a little or put off some leisure activities.

The rate you earn on your retirement investments is associated with how risky those investments are. High-risk penny stocks may double in value one day and be worthless the next. Retirement experts don’t suggest high-risk investments for long-term retirement goals.  Regular contributions into secure investments over the long term are more likely to deliver the results you’re looking for.

Playing Retirement Catch-Up and Winning

Start today. Open an individual retirement account (IRA) at your local bank.  Set up automated cash transfers from your checking or savings account into your IRA account so you don’t even see the money.

If your employer offers a retirement savings plan like a 401(k) or company IRA, max out your contributions. Talk to the people in payroll and have the maximum amount deposited into the company’s retirement plan. Again, it’s easier to make regular contributions month after month when you automate the process.

Pay down credit card debt and other high-interest debt as soon as possible. Then, deposit those credit card payments into your retirement savings accounts each month.

Consider investing in several mutual funds. Mutual funds are collections of stocks and/or bonds that provide diversification so you don’t place all of your eggs in one basket.

Take advantage of tax laws that enable you to put aside more in tax-protected savings options like a 401(k), an IRA or a Roth IRA after a certain age so you catch up. Talk to your accountant, banker, or other financial advisor and make the maximum contribution allowable under current tax law.

Big Moves May Lead to a Brighter Future

There are several BIG moves – changes in lifestyle – than can improve your chances of enjoying a secure retirement.

For example, if you live in expensive area, consider moving to a state with a lower cost of living. Your retirement savings may go further when you live in a state with low taxes, reasonable property valuations, and lower costs for everything from food to gas at the pump.

Another big move? Work longer. If you take early retirement, your Social Security income is less each month than if you wait until you’re 65 or 70 to finally take the gold watch. This will increase the amount you receive from the Social Security Administration each month, and it gives your IRA or 401(k) investments a few more years to grow in value.

How about taking on a second job? A part-time job can generate a monthly contribution to your future security if you have the self-discipline to make sure your second-job income is, indeed, set aside for the future.

Start by calculating how much you’ll need and how much you can expect to receive from your Social Security account. Then, talk to your bank representative about savings options for retirement.

Playing catch-up with the future may not be easy, but it’s something to start working on today. The longer you wait, the harder it will be to enjoy financial security in retirement.



The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice.


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