Maybe you spent most of your early career working paycheck to paycheck. Perhaps your savings went to college funds for your children or paid off old debts. Whatever your circumstances, it’s never too late to build a nest egg. Follow the below tips for building retirement savings and avoid penny-pinching in your golden years.
Invest in a 401(k) Plan
A 401(k) can get your retirement plan from 0 to 60 in a matter of years. Most financial advisers recommend late starters max out their annual contribution if they can afford it.The maximum amounts change each year, and there may be a special catch-up provision for those approaching retirement age. In some cases, employers may match a certain percentage of the contribution, which is essentially free money in the bank.
Grow Your Personal Savings
It may be difficult to save a portion of your salary each month, but you should always pay yourself first. If squirreling away money has always been difficult for you, it may be easier to automatically have a percentage of your income direct deposited to a high-yield savings account. The standard recommendation is a savings rate of 10%, but those late to the game may want to save more. But consider your income, expenses, and debt before finding a number that suits your budget.
Balance Your Portfolio
As you increase your retirement savings, you’ll need to make sure the additional funds don’t create a portfolio imbalance. As your different investments increase, an annual review will help ensure your portfolio stays balanced for risk, asset allocation and time horizon.
It may seem like a daunting task to begin saving so late, but with discipline and a little research you can have yourself sitting on a comfortable nest egg before it’s time to retire.
Consult with a Professional
Tax laws and tax rules are constantly being updated and interpreted. This article contains general information, so please discuss your individual situation with a trusted professional before making tax decisions. Click HERE to contact our office to schedule a free consultation.