Is it Ever Too Late to Save for Retirement?


Life can seem like little more than an endless cascade of expenses. You might have spent the last decade planning to save for retirement next week, next month, or next year.

But then the car needed repairs, you bought a house, and your kid went to college. If life has left you with no retirement savings, is it ever too late?

There obviously comes a point when you can no longer save. If you’re retiring tomorrow and can’t keep working, the clock has run out. For most people, however, it is truly never too late to save for retirement—if, and only if, you’re willing to plan and sacrifice.


When Is it Too Late?

The earlier you begin saving for retirement, the greater value that money will eventually have. Money saved in your twenties is at a premium, with a slight decrease in value in the thirties.

By your fifties, you’re in trouble if you haven’t saved. That doesn’t mean it’s too late. You’ll just need to play a game of catch-up. You need to max out retirement contributions, and may also need to rely on taxable brokerage accounts.

Even if you can’t save the full amount you need, don’t be discouraged. You may be able to combine Social Security payments, payments from a part-time job, and the proceeds from selling your home with your small savings to create a comfortable retirement. The key here is to build as much of a cushion as you can.


Late Retirement Savings: Every Little Bit Counts

It’s easy to beat yourself up if you’ve delayed saving, but the median balance of retirement accounts of people in their fifties is only about $30,000. People aren’t going broke in retirement en masse. That means even very late in the game, it’s possible to catch up.

To maximize your savings, you need to slash expenses. Skip the vacation. Rein in expenses. Buy generic. Eat out less frequently.

A dollar here or there might not seem much. It adds up. Every time you save money on something or opt not to make a major purchase, immediately transfer that money into your retirement account.

This maximizes the amount of time the money can benefit from interest compounding. This steady accumulation of funds can incentivize you to keep going.


The Role of Good Financial Advice

If you’re way behind on retirement savings, you need to get sound financial advice now. Your advisor might suggest a different type of retirement account, or even that you delay retirement for a year or two.

He or she can also figure out whether part-time work or a post-retirement consulting job can enable you to make ends meet.

Don’t forget about taxes; you’ll have to pay them in retirement, too, and your advisor can help you strike the right balance between maximizing your income and minimizing your tax liability.


How to Create Your Back-Up Plan

If you can’t save enough money or your retirement is imminent, it’s time to create your backup plan. Consider these possible sources of cash and savings:

  • Selling your home: If your home is costing you a lot of money, get out from under it by selling it.
  • A reverse mortgage: A wise alternative to selling, a reverse mortgage offers access to money, but you can stay in your home. As long as you comply with the terms of the loan, you don’t have to repay the money as long as you remain in your home.
  • Living with family: Your mortgage or rent is probably your biggest expense. Can you offer something to your family, such as childcare, in exchange for a place to live?
  • Extra work: A part-time job or consulting work can rake in plenty of income. Retirement doesn’t have to begin at 65. You can slowly settle into it instead.

So are you in your later years looking to save for retirement?  If so how are you dealing with the situation? I would love to hear how you are dealing with this situation in the comments below.


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