Over 50? Here’s How to Start Saving Today

A lot of people reach the age of 50 and realize they haven’t put anything away for retirement yet. While that is not the ideal situation, it doesn’t necessarily mean it’s too late either. Here we will review several ways to start saving today, even if you are nearing retirement.

1. Opt Into a Plan

 Most employers offer up some time of retirement plan that you can opt into with automated payments directly from your paychecks. These include both Traditional and Roth 401(k) plans, the difference between the two depending on when you’re going to get taxed on that money. You get taxed before you contribute in a Traditional IRA and you’ll pay less currently because you’ll be deferring your contribution as taxable income in the future when you go to take the money out, or with the Roth you pay the taxes on it now, and won’t have to again when it comes time to withdraw it. It all depends on your current tax bracket, and if you are a person who makes a lot of money or contributes a lot to their 401(k) it might make more sense for you to stick to a Traditional account, so you won’t be slammed by the IRS at the end of the year.

 

2. Investment with Target Date Funds

Target-Date funds are a great place, to begin with for a novice investor. You pick the year you anticipate retiring, and then the fund builds the best portfolio for you off of that information. Like if you plan on retiring in 2040, let’s say, then most of your money will be put towards stocks currently, and switch over to bonds as you get closer to that date. It is done so to grow your investment as much as possible while mitigating any risk you have for investing.

 

3. An IRA Not Through Your Employer

 You can also look into additional investments with a Roth IRA, not through your place of employment. Roth IRAs are typically one of the best investments because of the minimal amount of taxes you’ll have to pay on that money.

 

4. Contribute More Than the Minimum

 The IRS lets folks over 50 contribute extra income towards their accounts to catch up on any retirement investments they may have missed, surpassing previously established max out amounts. For most 401(k) type plans, including the TSP (the federal government’s retirement savings fund) you can contribute an additional 6,000 dollars per year after the 50 year age mark, and an additional 1,000 dollars per year on any IRAs.

 

5. Get a Second Job

 Your Social Security benefit is based on your 35 highest-earning years average, so contributing more to Social Security by getting a second job can raise that amount when it comes time to collect. Start putting more in now however you can, so you can collect more later when you retire.

6. Get the Right Financial Advisor

 Sometimes you need to get some advice and seeking out a financial planner is the next move, especially once you start beefing up the money in your accounts. But be wary of who you seek help from, as fee-only financial advisors are the best way to get advice without commission rates swaying their opinion in a way that could benefit them.

 

7. Debt Reduction

 Of course, the best thing you can do before heading into retirement is to get rid of any outstanding debt, and working to pay off anything you owe should be your top priority. Beyond that, looking to consolidate any debt under a credit company that offers a low-interest rate is the next best thing you can do, as varying rates and accounts are sometimes hard to manage. Setting timelines and goals can also help with debt reduction in figuring out how much you need to spend per month on paying off what you owe. Think of it the same as your mortgage, a recurring bill that never wavers, until you pay off your debt (and your mortgage too) completely.

These are all just tips, of course, and they may not apply to your situation, but figuring out which avenues to pursue in order to reach your retirement goals is the first step you’ll need to take, even if you are past the age of 50.

Federal Retirement

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