Everyone knows that it’s important to save for retirement, but other, more immediate expenses can get in the way. As you spend money on everything from unexpected health care costs to paying for your kids to go to college, retirement savings are often put aside until tomorrow.
Ideally, the earlier you start saving, the better, but for many people, that's not their reality. In fact, about 48% of households headed by someone age 55 and over had no retirement savings or traditional pension plan, according to the U.S. Government Accountability Office.
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And for the average American, retirement lasts about 20 years, so that's a good number of years to make any retirement savings last.
The following tips can help you save money for retirement, even if you’re not starting at an early age:
Start today.
You may feel discouraged if you haven’t built a healthy retirement nest egg, but that’s no reason to give up.
"I say it's never too late, and if you haven't started, you should start today," said Jeanene Fowler, financial advisor with Edward Jones in Atlanta. "The biggest thing is, if you haven't started, get started."
Decide what you want your retirement to look like.
Future retirees should decide what they want their retirement years to look like, Fowler said.
You may want to retire sooner or keep working as long as you can. Or you may want to travel or move across the country to be closer to children and grandchildren. Knowing the goal you have in mind is an important first step.
Meet with a financial adviser to devise a plan.
Once you have a goal in mind, a plan can help you reach it. Meeting with a financial adviser helps you look at your current situation and devise an approach that works for you, Fowler said. You’ll also discuss where you currently are financially and your risk tolerance for investments. Your adviser can devise a plan to help you reach your goals.
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Find out about your Social Security benefits.
Social Security retirement benefits replace about 40% of a median wage earner's income after retirement, according to the U.S. Department of Labor.
Using the retirement estimator on the Social Security website can estimate your benefits based on your actual earnings records. The figures won't be exact until you actually apply for benefits, but they'll give you an estimate.
Take advantage of age-related savings perks.
Being older has its perks, at least as far as retirement savings are concerned. If you're older than 50, you can boost your retirement savings since you're allowed to raise contributions to traditional and Roth IRAs to $7,000 for 2020, Investopedia.com said.
You can also contribute an extra $6,500 to an employee-sponsored retirement plan like a 401(k) as a “catch up contribution,” in addition to the regular $19,500 maximum salary deferral amount.
Plan for the expected and the unexpected.
Plan for the expected aspects of retirement, including what you want it to look like, but don’t forget the unexpected events like a job loss or market decline, Fowler said.
Your portfolio needs to be positioned to handle both the expected and the unexpected.
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Stay disciplined.
Even in uncertain times, it’s important to realize that while you can’t control the markets, you can control your reaction to it, Fowler said.
“Don’t panic, stay disciplined and work on long-term goals,” she recommended. “Make sure we have the proper diversification and make sure the focus is on the future.”
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