Entering your 50s and behind in your retirement planning goals? Don't fret. You've still got time to get your financial plan back on track.
There are many steps that older investors can take to better prepare themselves financially for retirement. Here are six tips that may help you make the most of your final working years.
- Catch up. If you have access to a 401(k) or other workplace-sponsored plan at work, make the $5,500 catch-up contribution that is available to participants aged 50 and older. Note that you are first required to contribute the annual employee maximum, $17,500 for 2013, before making the catch-up contribution.
- Fund an IRA. Investors aged 50 and older can contribute $6,500 annually (the $5,500 annual contribution plus an additional catch-up contribution of $1,000). An investor in his or her 50s who contributes the maximum amounts to both a 401(k) and an IRA could accelerate retirement savings by more than $25,000 a year.
- Consider dividends. If you do not have access to a workplace-sponsored retirement plan, or you already contribute the maximum to your qualified retirement accounts, consider stocks that offer dividend reinvestment.1 Reinvesting your dividends can help to grow your account balance over time.
- Make little cuts. Consider how you can trim expenses while continuing to enjoy life. Some suggestions for quick savings: eliminate or reduce premium cable channels that you do not watch, memberships that you do not use regularly, and frequent splurges on dining out or coffee runs. An extra $100 a month saved today could make a big difference down the road.
- Review strategies for postponing retirement. You may be able to learn new skills that could increase your marketability to potential employers. Even a part-time job could reduce your need to deplete retirement assets.
- Don't give up. Many preretirees falsely believe that there is nothing they can do to build retirement assets and, as a result, do nothing. Remember that you control how much you invest and, in many areas, how much you spend. Make a plan -- and stick with it.
1Investing in stocks involves risk, including loss of principal.
Michelle Maccio is a CERTIFIED FINANCIAL PLANNER™ and is the founder of Maccio Financial Group. For more information, visit the company website at www.macciofg.com, or call (860) 426-1407.
Trim expenses? Who you kidding? So what do you tell those over 50 that lost there jobs and will never be employed again?
Over 60 yrs in age think just short term buys. Have some fun. I wish I did this many many years back. Great paying divident stocks out there. Some as high as 18%. I try to look for low cost but hih yielding stocks. Play the x-date, get in - get out, buy again. Takes a little practice time.
Costs are only up if you continue to pay those costs, I am speaking of luxury items and not gas, heat, electric, etc. Dont dine out as much, buy less fancy cloths, make your "to go" coffee, bulk buy food and learn new receipes, etc. My son looks at big houses and says wow they have a lot of money and I always tell him how do you know what they have in the bank? Max that company 401 and just do not touch it ever, forget it is there but for semi-annual checks on the funds and their performance.
Giving your money to Fidelity to be part of the latest pump'n'dump scam shouldn't be confused with "saving for retirement." Having to quit your job to get your money. Wrap your head around that one....
Charles' comment above says it all as well. Way to go Charles, just hope its in a nice low tax plan?