By Brian Bloxom, ChFEBCSM
Hopefully you enjoy your job (I know I do!). But even in the best of careers, work is…well, work. And sometimes what keeps you clocking in and out day in and day out is knowing that one day you’ll clock out for good. And especially after the last couple years we’ve had, transitioning into retirement has likely never sounded sweeter. Relaxation, peace, more time for traveling, hobbies, and family…sign me up! But what happens if you haven’t prepared for this milestone—and all the years that follow in the next stage of life?
Whether you’re in your 40s, 50s, or even older, it’s never too late to put a strategic plan in place to prepare for a fulfilling retirement.
Let’s go over four ways to catch up on saving for retirement later in life.
Know Your Expenses
When preparing for retirement, you want to start by knowing your expenses. Without evaluating your living expenses, you can overestimate or underestimate how much you will need in retirement.
When tracking your expenses, don’t focus solely on your necessary costs such as a mortgage, car payment, medical bills, etc. Instead, you want to keep track of every expense, big or small, so you have a clear idea of your monthly financial responsibilities.
This also allows you to see where you can cut back on your spending. Since you want to max out your retirement contributions and pay off debt, cutting back on unnecessary expenses will help you tremendously. You can then put your extra money toward reaching your other financial goals.
Play Catch-Up
If you’re saving for retirement later in life, it should be no surprise that you’ll have to play catch-up on your retirement savings.
First, make sure to max out your 401(k) account contributions every year leading up to your retirement. You’ll also want to max out your Roth IRA contributions, (1) which will grow tax-free. You can also withdraw them tax-free, so it’s a great way to supplement your 401(k) retirement savings.
You should also consider saving money in other places aside from a retirement account if you have already maxed out those options. (2) You can save money in a certificate of deposit, money market account, or traditional savings account if you have to.
Delay Your Retirement
Use time to your advantage when saving for retirement. Every year that you delay your retirement and continue to make contributions to your retirement accounts, you are improving your retirement status.
Another option is to work part-time during your retirement, which lets you supplement your retirement income so you aren’t solely relying on what you have saved.
Pay Off Your Debt
While saving for retirement, be sure you’re also paying off debt. Keep in mind that your current income is more than your retirement income will be, so you want as much space in your budget as possible.
It’s Not Too Late to Prepare for Retirement
They don’t call them the golden years for nothing. And they don’t come without diligent and strategic saving and planning. No matter what age you are, you must prepare financially in order to experience an enjoyable retirement that will last as long as you do. Completing the four steps outlined above is a fantastic start, but partnering with a financial advisor skilled in retirement planning can make a world of difference in helping you begin your retirement years in the best financial state possible.
We at Sentinel Wealth Partners understand that your retirement plan is complex, and we welcome the opportunity to help create your unique road map and guide you on your retirement journey. To get started, reach out to us today by calling our office at 703-832-0164, sending an email to brian@sentinelwealthpartners.com, or using our online calendar.
Roth IRA distributions are tax-free if made 5 years after the initial contribution to the plan and you are over 59 1/2.
About Brian
Brian Bloxom is an Independent Financial Advisor, Chartered Federal Employee Benefits Consultant (ChFEBCSM), and Chartered Retirement Planning Counselor (CRPC) with 25 years of experience in financial advising. He founded Sentinel Wealth Partners to serve retirees, individuals approaching retirement, and individuals managing complex retirement plans such as company plans or federal benefits plans. His expertise and dedication to helping his clients achieve their goals make him a trusted resource that will help you feel confident in your customized retirement plan. Brian’s mission is to be available to his clients—all the time. He’s here to solve your problems, relieve your anxiety, and give you optimism for retirement. Because ultimately, your retirement should be about well-deserved enjoyment, and not about stress or anxiety. When he’s not working, you can find Brian spending time with his wife, Jessica, and their two sons, Spencer and Preston. He enjoys coaching soccer, serving in his community, golfing, and relaxing at his vacation home at Lake Anna, VA. To learn more about Brian, connect with him on LinkedIn.
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(2) https://money.cnn.com/2018/04/11/retirement/retirement-saving-catch-up/index.html