Realistic Last-Minute Retirement Planning Strategies
If you haven’t been able to consistently save for retirement and now it’s looming closer, here are some realistic last-minute retirement planning ideas for you:
Start Saving Now
Saving when you’re young is so important because of the power of compounding interest. If you haven’t been able to consistently save 15% of your income throughout your career, then you need to save at a higher rate, starting now. Good news! The IRS allows people over age 50 to contribute more toward IRAs and 401(k)s. For the 2017 tax year, you can max out your IRA contributions at $6,500 and 401(k) contributions at $24,000. $7,000 a year more than younger workers!
Cut Your Costs
If you can make some changes to your lifestyle spending, that can have a great impact on how long your savings will last. For example: If your cost of living is $80,000 a year and you have $400,000 in the bank, then you have enough savings to last about five years. If you could slash your spending by 50%, then your savings would last you ten years. And, it would be earning interest for longer.
But How?
Reducing your living expenses may take drastic decisions to accomplish that goal. Moving to an area with a lower cost of living is one effective way to cut your costs. Places like Florida and the Southwest are much less expensive than coastal or urban areas. You can also review the equity you have in your home versus what you need for retirement. You might be able to sell your existing home and buy or rent a smaller home nearby, while applying your profits to your retirement savings.
Other Ideas
Working longer is another way to continue bringing in income and get higher Social Security checks when you retire. Many retirees also get part-time jobs doing something they enjoy. You can also consider investing in less conservative vehicles with the goal of earning higher returns. A reverse mortgage is also worth investigating, which allows you to stay in your home while receiving monthly checks. And, if you’re ever short on cash, there are options out there for getting you through tough times. You can begin implementing these last-minute retirement planning ideas today. Just do it!
