If you are unprepared for retirement, there is good news. That good news is that it isn’t too late to start saving. If you just turned fifty, you likely have a little bit more than ten years to save. While it won’t be as easy as it was when you were twenty, thirty, or forty, it is still possible.
The first step in planning for retirement at the age of fifty is determining how much money you need to save. On average, financial experts state that most individuals need at least 70% of their current income to financially survive through retirement. A small percentage of that, around 30% to 40%, may come from social security benefits. It is also stated that you should prepare to spend thirty years in retirement.
If you have been contributing to a 401(k) plan at work, you are a step ahead. You likely have a few thousand dollars or more saved. You will want to keep on contributing. Be sure to meet the requirements that your company has for matching. When you do so, your company will match the contributions that you made. This money can go a long way, especially if you are finding yourself unprepared for retirement.
If you are employed, it is also important to examine pension plans. Pension plans are advised for long-term employees. Now is the best time to get one, as you are less likely to leave your job. There are some companies that have rules and restrictions, such as you lose your pension if you switch jobs.
It is also important to examine Retirement plans such as the IRA in the US or the RRSP in Canada. Do you already have one? If not, now is the time to start. Both give you numerous tax benefits and they are a much better approach than traditional savings accounts. Why? Because many individuals find it easier to dip into their savings accounts and spend their money. Whether you use that money for yourself or give it to family members, it reduces the amount of money that you have for retirement. It is also important to note that the rules for both as you hit 50.
As previously stated, most individuals will receive social security benefits that account for about 30 to 40% of income needed during retirement. This is, however, just an average figure. You can request a statement that outlines your benefits. This statement can give you an idea of how much in social security benefits you will receive overtime. With that said, this is also just an estimate; therefore, it is not a figure that you should rely heavily upon.
Now it also the time to start living on a fixed income. There are two benefits to doing so. When in retirement, you will be on a fixed income. You will run into trouble if your money runs out too soon. Starting to live on a fixed income now can give you practice for when you truly do depend on it. Also, when living on a fixed income, you are able to reduce your expenses. Any money that you save can be put towards your retirement.
If worse comes to worse and you are truly worried about retirement, now is the time to supplement your income. A second job may be the last thing you want or need, but it may help you considerably. If you do opt for a second part-time job, place any money that you make into a retirement account, whether it be a Retirement Account or a savings account. Working a second job when you are fifty is much better than doing so when you are sixty.