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Retirement Saving Strategies for Late Starters

If you think it’s too late to start saving for retirement, think again. By setting some realistic goals and creating a plan, even for a few years, you can create a nest egg that can help you live a more comfortable retirement.

• Start Saving Now!
• Implement Cost-Cutting Strategies
• Make Some Lifestyle Changes
• Redefine Retirement
• Other Resources
• E-mail this Information to A Friend
• Other Topics in the Consumer Focus Archive

Posted: December 1, 2005

Start Saving Now!

"Time is money" may be a trite expression, but when it comes to saving, it’s still very true. Just remember the compound interest lesson calculations you learned in math class. That lesson still applies. In a few years, you can make a significant contribution to your nest egg with a disciplined savings strategy.

Put every possible dollar into tax-advantageous retirement savings plans. If your employer offers to match your contribution to a 401(k), take advantage of that important retirement savings vehicle. Your savings will grow even faster. Don’t leave money on the table! Look for other tax deductible savings plans if you still have a little extra to save. Your employer may offer additional pre-tax saving plans or you could open your own IRA. In addition, special provisions in federal retirement savings law allow employees 50 and older to save even more due to special catch-up provisions.

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Implement Cost-Cutting Strategies

Remember, a little cost-cutting now will help ensure that you enjoy a more comfortable retirement later. If you were planning to treat yourself to a new car, consider making due with your current vehicle for a few more years. Reallocate the money from the money you’d use for the down payment toward your savings strategy. Also, take a look at your auto insurance coverage. If you’re paying for collision coverage for an older vehicle, consider dropping it. Take a look at your deductible, too. If you have a low deductible, perhaps $250, consider raising it to at least $500 or even $100. These two strategies could significantly reduce your auto insurance premium.

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Make Some Lifestyle Changes

If you were considering taking an out-of-town vacation, vacation at home. You might be surprised by the interesting activities you have in town or a short drive away. Downsizing into a smaller home, hopefully with a smaller mortgage or none at all, may be an option. Even small changes like skipping the daily $4.00 cup of boutique coffee or packing your own lunch for work it can save you hundreds of dollars each year.

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Redefine Retirement

Consider working longer. Postponing retirement by just a year or two can help you save thousands toward your goal and also allow more time for investment strategies to pay off. Also give thought to what your definition of retirement is. Many people who fully retire find themselves looking for a part-time job because they’re bored. Instead of leaving your employer entirely, consider a phased retirement and continue to working part time for several years.

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Other Resources

This is just a brief overview. For more information, check out these resources:

Read these publications online or order them from FCIC:

• 66 Ways to Save Money
• 401 (k) Plans
• Annuities
• Introduction to Mutual Funds
• Savings Fitness: A Guide to Your Money and Your Financial Future
• Social Security: Understanding the Benefits
• Ten Questions to Ask When Choosing a Financial Planner
• What You Should Know About Financial Planning

• Publications available for ordering from our Money Page

Websites*:

• Financial Security in Later Life (Cooperative State Research, Education, and Extension Service)
• Investing for Your Future (Rutgers Cooperative Extension)
• Late Savers Guidebook (National Endowment for Financial Education)

* Names of resources and organizations included in this online article are provided as examples only, and their inclusion does not mean that they are endorsed by the Federal Citizen Information Center or any other Government agency. Also, if a particular resource or organization is not mentioned, this does not mean or imply that it is unsatisfactory.

*If you click on these links, you are leaving FCIC's website. Please bookmark us before you leave so you can return easily. FCIC is not responsible for the content of these websites.

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For more information on other popular consumer issues check out FCIC's Consumer Focus Archive.

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