I heard a great quote, “The best time to plant a tree is twenty years ago. The second best time is now.” Essentially, take action. Don’t let a late start stop you from saving.
If you are a later investor, say in your 50s or 60s, don’t worry. It’s not too late to plan and save for retirement. It’s more about making the right investment choices for you. And remember, your investments can continue to grow after you retire, too.
Set realistic goals. When do you want to retire? How much do you need to retire? Remember that you’ll probably have some Social Security money in retirement to supplement your investment income.
Save, save, save. You may have to trim your budget of nonessential items and entertainment to build your retirement account, but facing reality now will help you to enjoy your golden years.
Maximize your IRA contributions. The IRS lets you catch-up by increasing the annual IRA contribution limit if you’re over the age of 50. Take advantage of the tax benefit and add to your savings.
Diversify. Consider a variety of investment options, including stocks or mutual funds for money you don’t need for 5-10 years, varying term certificates for money you need over the next five years and an interest-bearing liquid account, like a money market, for what you’ll need in the next year. This approach should provide a pretty good cushion for necessary for emergencies and take advantage of future economic growth.
Get help. You don’t have to be a professional. You just need to get advice from one. You shouldn’t have to pay in advance to meet with and find the right person for you. Get some recommendations from trustworthy sources and speak with several financial planners until you find a person that makes you feel comfortable. Just remember to manage your risks by diversifying your portfolio and spreading your investment terms to cover short and long term needs.
You may have waited too long to realize the potential of compounding interest, but it’s not too late to secure your future with time and age appropriate investment options.