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Saving for Retirement no matter what your age


Having enough money for retirement is a crucial factor in life. After all, this is the time to rest and take it easy without the worries and rigors of active working. It is only paramount, therefore, that the more money one has, the more comfortable one can be.

While it is true that the earlier one begins investing, the better are the chances of saving more (courtesy compound interest), one can always save more for retirement even at later stages of life.

Here are some universal tips that can help you grow your retirement nest egg, no matter you’re your age is:

Start now: Taking the first step is the most essential thing to do when saving for retirement, especially if you are in the later stages. Don’t let overthinking get in the way of taking a step towards saving more. If you’re younger, you should definitely pay attention to start saving and investing as much as you possibly can and allow for compound interest to work in your favor as much as possible.

Add to the 401(k): One of the time-tested and best ways to save for retirement is having a 401(k) plan in place. In many workplaces, employers offers a traditional 401(k) plan, allowing employees to contribute pre-tax money, that offers considerable advantages.

Start your IRA: Having an individual retirement account (IRA) is yet another great way to build up your nest egg. IRAs come in two varieties – the traditional IRA, and the Roth IRA. Traditional IRAs are usually ideal for those who already have a workplace retirement plan, has tax-deductible contributions, and offer the opportunity to keep tax-deferred till the point after retirement when you start making your withdrawals. Roth IRAs, on the other hand, are more suitable for those with more phased-out income limits. Generally more flexible, they are funded by after-tax contributions, and have their qualified distributions (earnings included) enjoying a federal-tax-free (and sometimes even state-tax-free) status, provided you are at least 59½-years-olf, and meet the minimum holding period requirements.

Use catch-up contributions: Given the limited capacity of 401(k) plans and IRAs, beginning to save early in life is an absolute must. That said, if you’re among the many who are in the later stages of life and have save nothing-to-less, all is not lost. For those aged 50 and above – you can take advantage of being eligible to make “catch-up” contributions to IRAs and 401(k)s by contributing more than what is the monthly limit. This will play a great role in boosting your retirement savings.

Keep your expenses in check: Much as anyone would hate to admit it, expenses have a habit of expanding all the time. While some of this is natural (due to inflation, the economy, rising costs of essentials, etc.) not all of it may be justified. Making regular checks of your expenses can help you track lifestyle and spending habits, come up with better ideas and reasonably save wherever it is possible to do so. For instance, bringing home-cooked lunch to work is a better option (both in terms of health and money) than buying lunch at work. Having a reduced spending allows you to have extra money on your hands which you can then save or invest.

Keep an emergency fund: No matter what your age, marital status or cashflow, having, maintaining and growing an emergency fund should be a must for anyone. During times of crisis (which despite all efforts, can strike anyone at any time), emergency funds can help rescue you from having to fork out from your regular expenses and even your savings. One way you can actually maintain and grow your emergency fund is by regulating how you spend the money you get paid extra – for example, when you receive a raise. Tempting as it is to spend the extra cash on little-to-moderate luxuries, it will be far more rewarding to stash at least half of it in the emergency fund.

If/When you’re closer to retirement, try and delay Social Security: This is one of the best ways to save for anyone who is closer to retiring. By delaying Social Security payment every year before reaching the age of 70, you can increase the amount of money you will receive during retirement to a good extent. You can start delaying Social Security at the age of 62 (which is the age when you start receiving them), delay all the way till you are 70. That way, you can make a significant difference to the amount you receive every month post-retirement, as well as potentially increase the amount of survivor benefits for your partner or spouse.