Learn and Plan | Tips for late-start retirement planning
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Tips for late-start retirement planning

Dec 4, 2023, 6:12:50 PM | Reading Time: 4 minutes

Only about two-thirds of workers are confident in having enough money to live comfortably in retirement. From rising inflation to increased debt, there are many reasons people are worried about their financial future. When saving for retirement, it can be a good idea to start setting money aside as soon as possible. If delayed too long, there can be a greater risk of needing more money to live comfortably as a retiree. Fortunately, with a detailed plan and budget, it’s possible to build a comfortable nest egg and ensure enough savings for retirement. Here are a few tips to help kickstart retirement planning in the later stages of life.

CalculatorCalculating how much is needed for retirement

Many Americans don’t have a realistic idea of how much money they’ll need to cover expenses and live comfortably once they leave the working world. Many experts recommend saving around 70 to 90 percent of your preretirement income to maintain your standard of living, but this can be higher or lower depending on your personal goals and financial priorities. After estimating future expenses and calculating how much savings are needed, it can be easier to determine a savings goal for every month going forward. It can be helpful to consider planned expenses, activities, housing costs, and future healthcare needs as you consider how much savings will be required for retirement.

Starting to save for retirement at age 30

People in their 30s may be well into their careers and taking advantage of a retirement savings account through their employer. They may also have an IRA or 401(k). This can be a great life stage to kick off saving for retirement and make progress toward a more secure financial future. At this age, there is ample time for those savings to grow, and if an employer offers a company match, there is even more opportunity to boost the earning potential. This age can also be a good time to nail down a budget, adopt healthy money habits, pay debt, and plan for emergencies.

Life InsuranceConsider life insurance

Life insurance helps ensure loved ones or dependents are protected financially, and some types of coverage can also help supplement retirement income. Life insurance policies that build cash value can help supplement retirement income down the road and may help fill income gaps that may exist between planned and actual expenses. Typically, the cash value can be accessed through policy loans or withdrawals, and the money can be used for a generally tax-free income stream.1

Starting to save for retirement at age 40

Many saving activities seen in your 30s can also be helpful in your 40s. Taking advantage of an employer offering a 401(k) match can help increase the income put aside for retirement. Other options include investing in an IRA, purchasing an annuity, or adding life insurance to a financial plan. At this life stage, diversifying a portfolio with different financial solutions and investments can allow savings to grow and bulk up the nest egg for the future.

Cutting credit card in halfGet rid of bad debt

To save more for the future, paying down debt can be a key step. After making a list of all debts owed from smallest to largest, extra money can be put toward paying off the smallest balance while making the minimum payments on the larger ones. Once the lowest balance is paid off, the extra money can then go toward the next smallest debt, and so on. Each time a debt is paid off, additional funds can be put toward the next on the list.

Many free online and mobile debt repayment tools allow users to track debt payment progress easily and conveniently. Other methods for eliminating debt include:

  • Paying off high-interest credit cards first.
  • Making larger monthly payments than the minimum required.
  • Looking for ways to earn extra income that can be strictly put toward decreasing debt.

Starting to save for retirement at age 50

Retirement could be right around the corner as you enter and exit your 50s. Even if you haven’t accumulated much savings for the future, it’s never too late to start. Individuals over 50 may be eligible to make catch-up contributions toward their retirement. The IRS maximum for 401(k)s is $22,500, and those over 50 can contribute an additional $7,500 to their retirement accounts to help boost their savings ahead of retirement.

All life stages can be a good time to meet with a financial professional, but it can be especially beneficial when feeling behind schedule. There may be ways to invest for the future, create guaranteed retirement income with an annuity, or tighten up spending that helps free up more money for future spending.

ShoppingMinimize costs now

As retirement approaches, shoring up finances and following good money habits is more important than ever. This can be an opportunity to reduce expenses, eliminate overspending, and find ways to direct more money toward savings. Trimming out non-essentials like TV streaming services, food delivery, and online shopping can reduce spending and free up more money in the budget to go toward retirement savings.

Whether you begin saving for retirement early in your life or years later, financially planning for the future can reap many benefits. A financial professional can help you calculate estimated expenses, determine a spending budget, and explore strategies that allow you to maximize savings and enjoy a fun and fulfilling retirement.

1. Policy loans from life insurance policies generally are not subject to income tax, provided the contract is not a Modified Endowment Contract (MEC), as defined by Section 7702A of the Internal Revenue Code. A policy loan or withdrawal from a life insurance policy that is a MEC is taxable upon receipt to the extent that the contract's cash value exceeds the premium paid. Distributions from MECs are subject to federal income tax to the extent of the gain in the policy, and taxable distributions are subject to a 10% additional tax before age 59½, with certain exceptions. Policy loans and withdrawals will reduce cash value and death benefits. Policy loans are subject to interest charges. Consult with and rely on your tax advisor or attorney on your specific situation.

The term financial professional is not intended to imply engagement in an advisory business in which compensation is not related to sales. Financial professionals that are insurance licensed will be paid a commission on the sale of an insurance product.


REV 12/2023