Reaching the milestone of retirement is what keeps most people clocking in and out day after day, year after year. Especially after a year like 2020, we all need something to look forward to and work toward: relaxation, peace, and more time for traveling, hobbies, and family…yes, please! But what happens if you haven’t prepared for this milestone—and all the years that follow in this next stage of life?
Whether you’re in your 40s, 50s, or even older, it’s never too late to put a strategic plan in place to prepare for a retirement you will enjoy.
Let’s go over four ways to catch up on saving for retirement later in life.
Know Your Expenses
When preparing for retirement, you want to start by knowing your expenses. Without evaluating your living expenses, you can overestimate or underestimate how much you will need in retirement.
When tracking your expenses, don’t focus solely on your necessary costs such as a mortgage, car payment, medical bills, etc. Instead, you want to keep track of every expense, big or small, so you have a clear idea of your monthly financial responsibilities.
This also allows you to see where you can cut back on your spending. Since you want to max out your retirement contributions and pay off debt, cutting back on unnecessary expenses will help you tremendously. You can then put your extra money toward reaching your other financial goals.
If you’re saving for retirement later in life, it should be no surprise that you’ll have to play catch-up on your retirement savings.
First, make sure to max out your 401(k) account contributions every year leading up to your retirement. You’ll also want to max out your Roth IRA contributions, (1) which will grow tax-free. You can also withdraw them tax-free, so it’s a great way to supplement your 401(k) retirement savings.
You should also consider saving money in other places aside from a retirement account if you have already maxed out those options. (2) You can save money in a certificate of deposit, money market account, or traditional savings account if you have to.
Delay Your Retirement
Use time to your advantage when saving for retirement. Every year that you delay your retirement and continue to make contributions to your retirement accounts, you are improving your retirement status.
Another option is to work part-time during your retirement, which lets you supplement your retirement income so you aren’t solely relying on what you have saved.
Pay Off Your Debt
While saving for retirement, be sure you’re also paying off debt. Keep in mind that your current income is more than your retirement income will be, so you want as much space in your budget as possible.
It’s Not Too Late To Prepare For Retirement
No matter what age you are, you must prepare financially in order to experience an enjoyable retirement that will last as long as you do. In addition to completing the four steps outlined above, speaking with a financial advisor skilled in retirement planning is essential to help you begin your retirement years in the best financial state possible. We at 1on1 Financial would love to help create your unique road map and be your guide on your retirement journey. To get started, call our office today at 909-981-1720 or simply click here to schedule a free 15-minute introductory phone call!
About 1on1 Financial
1on1 Financial is an independent financial advisory firm specializing in guiding working and retired professionals, executives, and business owners along the path to financial well-being. Founded in 1997, we use a team approach to help our clients accumulate wealth, generate income, preserve their life savings, and strategically plan for the distribution of their estate. With more than 50 years of combined experience in the financial services industry, we remain true to our fundamental mission: to provide personalized guidance, treatment, care, and service so our clients can gain control of their future and feel confident in their financial life.