It’s never too late to start saving for retirement. Follow these six steps to get started.
“I’m 57 years old. Is it too late to save money for retirement? I expect to be working for another 10 years.”
—Maria, Trenton, NJ
Saving for retirement can be daunting at any age, but it is particularly stressful when you are starting later in life. The good news is that it is never too late to reinforce your retirement savings. Taking stock of your current situation and having a realistic plan can help you go a long way in a shorter time.
Here are six tips to help you succeed.
You may need to revise your ideal picture of retirement and work to have enough income to sustain you for decades to come. In the present, some ideas could include scaling back as possible, downsizing, working longer, and maybe even working part-time through retirement.
Free, online retirement planning calculators may help you start to figure out how much you need to save to support your retirement income needs. (Search for “retirement planning calculator.”) Look for one that includes Social Security and other potential income sources. These typically provide information on your income sources over time and identify potential gaps. A calculator may also allow you to make a variety of adjustments to see how you can help boost your savings. You may also work with a financial professional for insights.
If you have nagging high-interest credit card debt, prioritize its payoff. Start with either the biggest debt or the debt with the highest interest rate. Once you pay off debt, consider putting those funds into retirement accounts instead.
You may feel regret, but instead, focus on an ambitious goal to just get started. Think about trying to save at least 10% of your current income on a regular basis. If possible, set up a monthly automatic transfer from your banking account to a retirement account. You could also commit to saving as much as possible from any extra income like bonuses or tax refunds.
If you have a retirement plan such as a 401(k) available through your employer, set up automatic contributions, if you haven’t already. If you are already participating, increase your contributions as much as possible. You can also save in an individual retirement account.
Keep in mind that if you are over 50, the IRS lets you make catch-up contributions, until age 63.
One of the easiest ways to boost your retirement savings is to work longer and delay Social Security payments until you reach full retirement age. That ensures you’re receiving the maximum benefit entitled to you.
A version of this previously appeared on HerMoney.
