3 Tips for Retirement Planning for Late Starters


One of the most difficult parts of starting your retirement planning later in life – say, in your 50’s – is that you won’t get much in interest or compounded returns. Even so, there are still ways to build a reassuring nest egg so that you can comfortably retire and enjoy your later years.
While pensions and Social Security can, and should, be a part of your retirement plan, they can’t be the only thing you rely on for money. After all, social security only gives you about 42% of a salary, and that’s a drastic difference from the money you’re used to having on a day-to-day basis.
That said, to build a comfortable nest egg, you are going to have to change your lifestyle in certain ways, and that can take the form of cutting your expenses or finding a whole new job with a much higher salary.
Before you sit down with your money manager or accountant, start to consider what kind of money you need in order to retire. A retirement calculator is a great tool to help you consider all expenses and how much income or savings you need.
Start Saving

It sounds simple, but chances are, if you’re looking at changing your retirement plan now, you haven’t been saving enough. At this stage in life, plan to put at least 10% of your income toward your retirement. To make this easier on your pocketbook – and on your state of mind – have the money automatically withdrawn and placed in the savings account you’ve chosen so it’s like you never had the money in the first place.
Additionally, when you get that raise at your current job, act like you never got it. Don’t increase your expenses; instead, put that “extra” money directly into your investments or savings.
Choose a Place to Invest
Now that you’ve started to save, you need a good place to put it. While you won’t gain as much interest, there are some investments that will work better than those that rely heavily on compounded returns. Namely, maximize your contribution to your 401(k), whether your employer matches your contribution or not. Additionally, with that 401(k), forget about the risky stock market and choose low-cost bond funds as your investment choice. The less risk at this point the better.
At the same time, spread the wealth around and have multiple investments. That way you can have a higher limit in regards to the contributions you make, since your investments are no longer interdependent.
Find Other Sources of Retirement Income
Another way to worry less about building up your retirement nest egg is to have an income that continues even after you retire. This can be done in a number of ways. While an investment property is always a great way to keep money coming in (although, as with anything, there can be risks with this too), also look back. Go through contracts with any past employers to see if you’re entitled to any sort of pension plan.
Additionally, while you’re full-time employed now, start moonlighting to build a network of other work. Whether you do this through direct selling or freelance work, it’s up to you; the perk to this kind of gig is that you can continue to do it once you retire. You’ll even be able to set your own hours.
Make Some Big Changes
If those three tips aren’t enough to build the nest egg you need, talk to your accountant or portfolio manager to come up with other, potentially more drastic, ways to maximize your savings. This also might mean it’s time to look for another job that has a better pension, or even doing a reverse mortgage on your home.
Retirement planning takes work, but the better you plan and save now, the easier it will be when it comes time to retire. As with anything else, different people have different needs. If you’re self-employed, for example, you may have other options. Just remember the most important takeaway from all this: start as early as you can.

Image Credit: Flickr (via Creative Commons)


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