Everyone dreams of the day they will retire. However, many people aren’t on a sure path to having a secure, comfortable retirement. While much of retirement preparation starts early in your career, there are still many things you can do to bolster your retirement fund in the final years of your career. You’ve heard that it’s never too early to start saving for retirement, but it’s also never too late to make changes that will earn you a little more luxury in your post-work life.
If you’re in your forties, fifties, or even sixties, you can still consider the following tips and secure yourself a more financially stable future.
1. Pad Your Savings
No matter how close you are to your target retirement age, you can still change your spending habits and add a little extra to your retirement savings. Reassess your budget often and look for ways to cut down on non-necessity spending.
A great way to save is to look for discounts that apply for your age group. For example, anyone 50 years of age or older can join AARP. AARP membership comes with everything from entertaining and dining discounts to online financial planning tools. You can even save money on car insurance through private insurers who offer lower AARP auto insurance rates and benefits.
2. Pay Off High-Interest Debt
While a mortgage and other low-interest debts may still be manageable as you near retirement, you’ll want to clear any high-interest debt, such as credit card debt, as soon as possible. Prioritize payments such that you pay off the debt with the highest interest rates first.
3. Avoid Dipping Into Your Retirement Fund
Life throws everyone a few curve balls from time to time. When financial times get hard, you may have to dip into your savings. However, you should do what you can to stay out of your retirement fund regardless of your current circumstances. Unless absolutely necessary, you want to maintain this boundary. By avoiding the use of your retirement fund, you can avoid losing out on tax-deferred returns on investment, which will play a significant role in how much you receive when you hit your retirement age.
4. Diversify Your Investment Portfolio
As you near retirement, you’ll want to take inventory of all your investments and reassess your risk tolerance. Depending on how many years of work you have remaining, you may want to consider further diversify these investments. Be sure to consider all of your options, including real estate, stocks, bonds, and mutual funds.
5. Take Advantage of Catch-up Contributions
Many 401(k) and IRAs allow people 50 or older to make up for lost time and make “catch-up” contributions that surpass their contribution limits. As stated by the Internal Revenue Service (IRS), “A catch-up contribution is, generally, an elective deferral made by a catch-up eligible participant that exceeds a statutory limit, a plan-imposed limit, or the ADP limit (an ‘applicable limit’).”
6. Plan to Hold Off on Claiming Social Security
Starting at age 62, it’s up to you when you claim your social security benefits. The earlier you claim social security relative to your full retirement age, the smaller the percentage of your full monthly benefit you will receive. Keep in mind that social security payments are calculated down to the month you decide to claim. Once you turn 70, waiting any longer to claim will not increase your benefits any further.
7. Get Realistic
The closer you are to retirement, the better you can assess what your actual post-career financial needs will be. This not only means creating a spending budget, but it also includes gauging your health and estimating potential medical and care costs. Don’t forget to factor in the fun costs like relaxing vacations and spoiling your grandkids!
8. Talk to a Professional
It’s never too late to seek advice from a financial adviser. As you near retirement, you’ll want to tie up all your loose ends and ensure you haven’t forgotten any crucial steps for retirement preparation. Especially if you have a spouse who’s also retiring soon, you’ll want a professional to take a look at your joint finances and steer you in the right direction.
Securing a Comfortable Future
Planning for retirement is a life-long journey, but even if you’re only a few years away, you can still modify your habits and make a difference for your post-career lifestyle. By following these tips and staying faithful to your budget and savings plans, you can secure yourself the comfortable retirement you’ve been dreaming of and working hard to earn.