Financial advisors agree that the best way to prepare for retirement is to start saving and investing early, however, not everybody is able to start saving in their 20s or 30s. This can lead to a significant amount of anxiety when approaching the age of 50, but the good news is that there are still ways for saving late and make your golden years much more comfortable.
Curb Spending and Avoid Debt
Reduce your spending now and don’t take on additional debt. While this might mean making some significant lifestyle changes, they will pay off once you begin your retirement. Try to reduce your existing debt as much as possible. As you reach the age of 50 and beyond, your mortgage should be the only remaining large debt.
Start Investing as Soon as Possible
Low risk savings can be effective at a young age, but as you get longer into your years, you won’t have the luxury of time. There are some lower risk investments that you can make to maximize your residual income, including bonds, or even target-date retirement funds. These retirement funds can allow you to create a sizeable retirement account in a short period of time, with some programs offering 10 year accounts. Vanguard Group Inc. is just one investment broker among many that can offer target-date accounts.
Saving Late, Consider Downsizing Your Home
If you have equity in a home, then this will be a significant asset when planning for retirement. If your home is now too big for your current needs, then downsizing is something that you can consider. Selling could mean that you are able to purchase a more affordable home outright, or, you could significantly reduce your payments with a new mortgage loan on a smaller property.
If you have the option to relocate to a more affordable city (where you will still be able to work), then this is also something that you should consider. It’s a big move to make, but it will mean a lower cost of living and less stress as you approach retirement.
Work Longer and Make a Slower Transition into Retirement
Probably not what you expected, but making a slow transition into retirement can save you a significant amount of stress while offsetting the years of saving that you have missed.
Part time work after wrapping up a career can provide you with more time to relax, while also creating an income that can be used for your general expenses. Delaying full retirement by even five years can be hugely beneficial for your financial situation when saving late.
It’s never too late to make a positive change in your retirement outlook. With these simple steps alone you will have the opportunity to live a more comfortable retirement without heavy financial burdens.
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