The best way to save for retirement in your 50s is to set some realistic expectations, consult an expert, use catch up contributions, plan when to retire, pay off debt, and buffer for the unexpected.
If you have no retirement savings at 50 or are just starting retirement savings at 55 this post will help. Many adults spend their lives working, paying for houses and cars, and may not have had the extra income to start saving early.
This guide helps understand how to crunch some savings for retirement into your 50s and be ready for retirement. There are some critical areas to pay attention to if you’re short on time and trying to save enough for retirement.
Set Realistic Expectations
Hopefully you’ve been using a IRA or 401k to start saving on top of other savings accounts you have. Ultimately, you’ll have to decide how much you’ll need to live with your expenses, medical bills, and your lifestyle. Fidelity Investments states that you should have 10x your income by age 67.
One mistake that many seniors make is setting their retirement goal too low and then having to compromise on how they live in retirement. Saving now means living larger later.
Consult An Expert
It can be challenging to come up with a plan of how to save in a short time frame in your 50s. It can be very beneficial to talk to an expert, so you can set the right goals and have a plan to accomplish it. Some employers have financial advisers on staff, if you don’t have one at your company it still can pay to go and meet with one.
Use Catch Up Contributions
If you’re over 50 and are behind on your retirement savings there are ways to catch up. One great way to get a jump on it is to put money into tax sheltered retirement accounts. IRAs and 401k are both strategies that can pay off big for saving in a crunch. For adults who are 50 and over it’s possible to save up to $6,500 in an IRA and $24,500 in a 401k.
Learn more about: Safe investments for retirees.
Plan When To Retire
A big decision is when to retire, especially if you’re being on your savings. In many cases your investments and savings will not be sufficient to fund your retirement. Today adults are pushing retirement back to give themselves longer to save, or they are going part time. Also, the earlier you start receiving benefits affects how much you’ll be able to collect.
Pay Off Debt
A large portion of adults will still have their mortgage to pay off in their 50s. This can be a large hurdle in retirement. Going into your retirement while still paying your mortgage isn’t ideal. With that said the reality of it is that about 30% of homeowners over the age of 65 still have a mortgage payment.
Buffer For The Unexpected
Large unexpected medical expenses are unfortunately a reality that becomes a part of retirement. Saving more than you need to live on is a good rule to follow. It will help keep your retirement nest egg dedicated to living expenses. While it means pull the belt tight now it gives you more freedom and protection later during your retirement.
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