If the question “When can I retire?” ties your stomach in knots, don’t feel like the Lone Ranger. Millions of your peers are in the same boat with little, if any, savings that will one day supplement their Social Security benefits during retirement.
Waiting until age 50 or 60 to start saving for retirement is not ideal. It’s late, but not too late. Anything you do now can improve your future.
DIVE IN: You don’t have the luxury to gently ease into retirement savings waters. Forget about the mistakes you’ve made in the past, and dive in. Focus your full attention on the years you have to save for the future.
KEEP WORKING: Every situation is unique, but generally as long as you are healthy, you need to keep working. You may be tempted to hang it up on the first day you can draw Social Security benefits, but do you really want to join the 10 million American retires who are currently living on Social Security and Medicare alone? Enough said.
SAVE LIKE MAD: Let’s say you are 50 and begin immediately by placing $2,000 in a Roth IRA account, invested in stocks earning on average 8 percent annually (historically that’s been the long-term return in stocks), and you add $2,000 each year (about $40 a week). You’ll have about $210,000 by the time you really need it at age 80. Or if you double that to $4,000 a year ($80 a week), you’ll have $418,000 in your account on your 80th birthday.
MAKE IT AUTOMATIC: There’s an unwritten rule of saving: You don’t miss what you don’t see. Set up an automatic savings deposit with your bank or employer where a set amount is deducted from your paycheck and sent directly to your savings or investment account.
GET THE MATCH: If your employer offers a matching 401(k) plan, sign up to participate, if your have not already. For each dollar you contribute to the plan, your employer matches it up to a set amount, like 3 percent, of your gross pay. That’s free money!
The amount of money you’ll need in retirement depends largely on your housing and medical expenses. A basic rule of thumb is that you will need 70 percent of your current income, adjusted for inflation. Once you have this figure in mind, deduct your projected Social Security income (you can get your statement online at www.ssa. gov/mystatement/) plus any other pensions or income you will receive. The amount that remains is the amount you’ll need to support from savings.
GET THIS BOOK: To jumpstart your retirement savings, you need to read “Can I Retire? How Much Money You Need to Retire and How to Manage Your Retirement Savings, Explained in 100 Pages or Less,” by Mike Piper (Simple Subject 2011), available at Amazon.com. I love this book because it’s short and easy to understand. Read it. Today.
So, is it too late for you to start saving for retirement? Only if you don’t start right now.
Mary Hunt is the founder of www.DebtProofLiving.com and author of 23 books, including her 2012 release, “7 Money Rules for Life.” You can email her at firstname.lastname@example.org, or write to Everyday Cheapskate, P.O. Box 2099, Cypress, CA 90630.
To find out more about Mary Hunt and read her past columns, please visit the Creators webpage at www.creators.com.