Late to the Retirement Savings Party?
Simple First Steps For Those Nearing Retirement Age But Don’t Have Savings
A recent survey of near-retirees by the Employee Benefit Research Institute and Greenwald and Associates found that around one-third of workers have less than $1,000 saved up for retirement. Saving often and early is the best advice given for retirement planning, but what happens if you are part of that one-third of workers already stumbling upon retirement with little to no nest egg? There are a number of ways to get your savings started. Here are just three of the most basic:
Start a tax-free retirement account now – Better late than never, they say, and it is definitely true in this case. Utilize a 401(k) or IRA, preferably one in which your employer matches your contributions. Utilize “catch up” contributions if you qualify. Every little bit helps. Speak to your financial professional for exact amounts and the best ways to do this.
Cut back present expenses and those in the future – “The goal is to free up as much money as you can to save for retirement or pay down debt and to reduce your expenses in retirement, as well, so you can eventually live on less income,” says Forbes Contributor Erik Carter, a certified financial planner.
Are there any bills on which you can negotiate the amount due? Do you have any voluntary variable expenses on which you can cut down? Can you switch to a cheaper provider or carrier? These are all questions you should ask yourself.
Furthermore, think long term and cut down the expenses you will need to pay in the future (during retirement) by paying down those debts now while you are still working. Speak to a financial planner or your financial institution for the most effective strategy for paying off debt that works with your specific situation.
Earn additional income – You can do this in two ways: Work past retirement age or work part time during retirement. Working at your full-time job for longer will not only add to your regular income, it will increase your Social Security benefits and possibly your pension benefits, among other advantages.
“You also won’t have to stretch your retirement dollars as long. However, this option depends greatly on your health and prospects for continued employment, so make sure you have a plan B as well,” Carter recommends.
That backup plan could be in the form of a side job after retirement, or of taking the opportunity to start your own business. This is an attractive option for many retirees because it gives them the chance to maintain an active lifestyle and pursue interests or goals they may not have had time for while they were working.
Again, these are just a few simple first steps you can take to get your retirement savings ball rolling. Be creative and resourceful. There are a lot of assets and tools out there that can help.
Published by Cumberland County Federal Credit Union
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