Sometimes, it seems as though personal finance advice is all about what you should have done. But we’re all able to easily identify the mistakes we’ve made in the past. The important advice is what you should do to correct those old mistakes. Shoulda coulda woulda is singularly unhelpful in those situations.
This is particularly true when it comes to retirement savings. If you’ve already received your AARP card and still have not started putting money aside for your retirement, those charts showing how much compound interest will earn you if you start saving in your 20s are depressing at best.
But workers in that situation can’t afford to wallow in their “if only!” feelings, even though they might want to. Instead, they need to make a plan for the next 15 to 20 years:
1. Start putting money aside right this minute. It doesn’t matter if the amount of money you think you can afford to save is relatively low. Just putting some money into a retirement account is a step in the right direction. If your employer offers a 401k retirement plan, make sure you at least save enough to qualify for their matching contribution. It may not seem like much, but you’ll be very glad of the extra padding to your account once you start seriously thinking about retirement.
2. Downsize. If the amount that you are putting aside is not sufficient to keep you comfortable in retirement, then you need to start thinking of ways to cut your expenses so that you can add more to
your retirement savings. Can you sell your house and live someplace cheaper? Can you trade your car for something cheaper, or lose it altogether? Are you paying for memberships or subscriptions that you’re not using? Do you eat out several times a week? Be willing to slash your expenses to the bone. You couldn’t ask for a more worthy cause than taking care of yourself in retirement. (Here are some more advice on how to downsize.)
3. Maximize your investments. Enough people are in the same lack-of-retirement-planning boat that there are several provisions for those who are over 50. While younger workers can only contribute a set amount to their 401k and IRAs, savers who are over 50 may funnel as much as $5,000 more every year. Take advantage of these higher limits and reap the rewards when you’re ready to retire.
4. Plan on working longer. The difference between how much you have saved to retire at 65 and the amount needed if you wait until you’re 70 can be enormous. In some cases, it can mean that you have to give up less of your lifestyle in favor of savings. If you love your job, why not just plan on staying there longer so you’ll have a little breathing room? (Alternatively, you can look into these ways to earn more money so you can still quit and enjoy income.)
5. Get professional help. When it comes to retirement planning, it can feel awfully intimidating trying to navigate the options. This is particularly true for workers who haven’t started saving before age 50, since they would likely have worked on their retirement savings sometime earlier in their careers if they hadn’t found investments intimidating. If this describes you, find yourself a qualified and objective financial planner to help you sort out your investment options. The National Association of Personal Financial Advisors can help you locate someone you can trust with these important decisions.
Starting your retirement savings late is not ideal. But rather than lament what you could have done differently, be proactive now and stick with it. You’ll be so glad you did.
Tagged as: 401k, Retirement
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FAQs
How to save for retirement when you're in your 50s
- Set realistic goals.
- Tackle debt.
- Take advantage of catch-up contributions.
- Create a health savings account.
- Make the most of Social Security.
- Generate income beyond investing.
- Don't abandon stocks in your portfolio.
If you retire with no money, you'll have to consider ways to create income to pay your living expenses. That might include applying for Social Security retirement benefits, getting a reverse mortgage if you own a home, or starting a side hustle or part-time job to generate a steady paycheck.
What should a 50 year old have saved for retirement? ›
By age 50, you'll want to have around six times your salary saved. If you're behind on saving in your 40s and 50s, aim to pay down your debt to free up funds each month. Also, be sure to take advantage of retirement plans and high-interest savings accounts.
What do people do with no retirement money? ›
Many retirees with little to no savings rely solely on Social Security as their main source of income. You can claim Social Security benefits as early as age 62, but your benefit amount will depend on when you start filing for the benefit.
How many 50 year olds have no retirement savings? ›
WASHINGTON—A new AARP survey finds that 20% of adults ages 50+ have no retirement savings, and more than half (61%) are worried they will not have enough money to support them in retirement.
Is 55 too late to save for retirement? ›
If you're between 55 and 64, you still have time to boost your retirement savings. Start by increasing your 401(k) or other retirement plan contributions if you aren't already maxed out. Consider whether a bigger pension or a higher Social Security benefit is worth working a little longer.
Is it normal to not want to retire? ›
Find Fulfillment in an Organization's Work
There are certainly baby boomers who can't wait to retire, especially those with physically or emotionally stressful professions. However, some older Americans are choosing to stay in their jobs or find new challenges that will keep them engaged.
What percent of people don t save for retirement? ›
That's not much to fall back on in retirement. As many as 28% of Americans have nothing saved for their retirement, 39% aren't contributing to a retirement fund and another 30% don't think they'll ever be able to retire. That's according to a new GoBankingRates survey.
How much does the average person need to have saved for retirement? ›
Key takeaways. Fidelity's guideline: Aim to save at least 1x your salary by 30, 3x by 40, 6x by 50, 8x by 60, and 10x by 67. Factors that will impact your personal savings goal include the age you plan to retire and the lifestyle you hope to have in retirement. If you're behind, don't fret.
How much money does an average 50 year old have? ›
Average net worth by age
| Age by decade | Average net worth | Median net worth |
|---|
| 40s | $713,796 | $126,881 |
| 50s | $1,310,775 | $292,085 |
| 60s | $1,634,724 | $454,489 |
| 70s | $1,588,886 | $378,018 |
4 more rowsThe average 401(k) balance by age
| Age | Average 401(k) | Median 401(k) |
|---|
| 30s | $160,517 | $69,718 |
| 40s | $344,182 | $151,274 |
| 50s | $558,740 | $247,338 |
| 60s | $555,621 | $209,382 |
3 more rowsThe 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals.
What is the average Social Security check? ›
Social Security offers a monthly benefit check to many kinds of recipients. As of December 2023, the average check is $1,767.03, according to the Social Security Administration – but that amount can differ drastically depending on the type of recipient. In fact, retirees typically make more than the overall average.
Can you retire with no Social Security? ›
If you hope to retire without Social Security, you'll probably need to save $1 million or more on your own. Making monthly retirement contributions is key to achieving that goal. But most people don't need to plan for a retirement without Social Security because the program will still be around in some form.
How to enjoy retirement with little money? ›
10 Ways to Live Frugally in Retirement
- Stick to a Budget. ...
- Plan for Healthcare Costs. ...
- Cut Your Housing Costs. ...
- Pay Yourself. ...
- Move to a Lower Cost Area. ...
- Forgo Eating Out. ...
- Hire a Financial Advisor. ...
- Reassess Your Insurance Needs.
Experts say even in your 50s, it's not too late to take steps to get in better financial shape. "While retirement is an exciting vision for a lot of people, the transition can be really stress-inducing," said Keri Dogan, senior vice president of financial wellness and retirement income solutions at Fidelity.
Is age 50 too late to start investing? ›
There's still time to put money into stocks
But the good thing about being in your 50s is that you're not necessarily on the cusp of retirement. You might conceivably be anywhere from 10 to almost 20 years away, depending on your specific age and retirement plans.
Is 50 too old to start a Roth IRA? ›
There is no age limit to open a Roth IRA, but there are income and contribution limits that investors should be aware of before funding one.
How many Americans have no retirement savings? ›
More than one-quarter of them have no retirement savings at all, according to a new study by the personal finance website GoBankingRates . The study surveyed more than 1,000 U.S. adults about their long-term savings, and the results were alarming: 28% had absolutely nothing saved for retirement.
