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6 Ways to Save for Retirement (Even if You're Behind)

Did you know almost half of Americans age 45 to 65 consider themselves behind on their retirement planning? Here are six ways you can start saving for retirement (even if you’re behind).
6 Ways to Save for Retirement (Even if You're Behind)

The numbers seem to bear this out: 21 percent of Americans have no savings, and 10 percent have less than $5,000 on hand. But these aren’t necessarily the ones fretting. Many of those expressing the most concern average over $400,000 in savings, well on their way to a solid nest egg. Many in this group cite the need to address immediate expenses as the primary reason they haven’t invested more.

The silver lining on this cloud is that it’s not too late to save for retirement. Below are five steps to consider as you prepare for life after work.

1. Get (your money) in the game.

  • Put your money to work. Your bank account or money market fund may feel cozy and secure, but it won’t bring the returns needed to ensure your long-term financial future. Barely more than half of all Americans have an Individual Retirement Account (IRA), and far fewer have annuities, stocks, or mutual funds. Those who feel confident in their savings have somewhat different financial realities: 70 percent have IRAs, and they own stocks, annuities, and mutual funds in far greater numbers. They’re committed and diversified. They let their money do the work.

  • Set it and forget it. Automate that weekly or monthly deduction out of your paycheck, so you never have that sick feeling of watching your money go somewhere other than your wallet.

  • Contribute more to retirement savings. Your goal should be to put 10 percent of your income aside, but start smaller if that’s too ambitious. Every percentage point you increase makes a real difference, as much as tens of thousands of dollars. This holds true for both employer-sponsored and self-employed programs. There are also “catch-up” contribution plans for those over 50 that are worth your consideration.

  • Save for a rainy day. First on your to-do list should be to amass enough immediately accessible cash—that bank account or money market fund mentioned earlier—to cover at least six months' worth of living expenses in case of emergencies such as a health scare, lost job, or unexpected home or car repairs.

  • Diversify. Diversification spreads out risk and puts your money in multiple places at once. Allow for a greater level of risk early on and consolidate to a more conservative stance as retirement draws closer. Also, consider after-tax options, such as a Roth IRA, which can make a big difference in the long run.

2. Work a little longer.

Although many of us are excited to leave the working world behind, it can prove beneficial to stick around a bit longer. An extra three or four years in the workforce allows you to contribute more to your tax-advantaged employer retirement plan. It also means that your employer will continue matching your contributions. If your current job doesn’t appeal for the long term, the rising gig economy may hold financial opportunities.

3. Spend a little less.

If your kids have flown the nest, consider downsizing, relocating to a more affordable neighborhood, or even moving to a state with lower taxes.’s Cost of Living Calendar is helpful when planning your next move.

Whether you stay or go, there are other ways to trim monthly expenditures. Consider a cheaper cable package (or even cut the cord), opt for generic medications, and eat out less frequently. Every dollar trimmed can go into retirement savings. Proceed with caution on the bigger ticket items (vacation, new car, updated kitchen). Make sure that the short-term benefits of a splurge won’t adversely affect your long-term retirement goals.

4. Mind the calendar.

There are deadlines and incentives built into the system that can deliver rewards if you use careful planning. Still, they also threaten serious penalties and lost benefits if they are ignored or missed. Make sure you meet the deadlines for contributing to, and withdrawing money from, retirement accounts and shop around for new Medicare coverage each year.

  • The first deadline comes three months before your 65th birthday when the seven-month initial enrollment period for Medicare begins. Miss this deadline, and your Medicare Part B and D premiums could increase permanently. Plus, you might not be able to buy supplemental coverage.

  • Once you reach full retirement age (67 for those born on or after 1960), Social Security benefits will no longer be withheld if you choose to collect and continue working.

  • If you delay taking Social Security until age 70 (the earliest you can start is 62), you will be entitled to seven to eight percent more per year. There are no additional benefits for waiting beyond age 70.

  • After age 70 1/2, distributions from traditional IRAs, 401(k)s, and Roth 401(k)s are required.

5. Let the professionals help.

As you embark on your retirement savings journey, you must have a co-pilot. A financial professional can help calibrate the perfect balance of risk and protection for your portfolio, troubleshoot issues, and offer expert recommendations on how to best build retirement savings. Surprisingly, only 39 percent of people make use of these gurus.

6. Take a breath and get started.

Saving for retirement is much like losing weight—best to start slow and build from there. But start now. The sooner you begin, the more money you’ll save, the quicker it will start working for you, and the closer to reality your retirement dreams will become. Take the first step toward a secure future today with our retirement calculators.

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