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When Your Retirement Savings Are Off To A Late Start

When Your Retirement Savings Are Off To A Late Start


We’ve all heard the excellent advice to start saving and investing in our twenties and keep at it throughout our careers so that someday we will be able to retire early, wealthy, or perhaps even both. Of course, not all of us started saving early. Or some of us did, but life happened along the way, our savings got interrupted (or spent), and we are in the difficult position of having to start over or catch up later in our careers. Or perhaps you were counting on a generous employer pension that has since been frozen, and you now face the challenge of saving and investing on your own to make up for a smaller pension benefit. There are many reasons why people are not able to save early and/or as often as they would prefer.

Fortunately, there are several ways to help patch up these financial potholes along your road to retirement. Every dollar we can save now is a dollar we won’t have to scrounge up later, when we are perhaps well past our prime scrounging years. Below and in no particular order are some of the retirement back-up strategies I have explored and discussed with clients and colleagues over the years:

Estimate your retirement budget.

Make that plural: “budgets.” Create two retirement budgets. The first one will be your minimum financial requirements – your best estimate of how much you will need to meet the necessities of life (food, clothing, shelter, insurance). You might find that you could retire on significantly less than you imagined. The second budget will be your desired lifestyle – the basics along with some travel or other bucket list retirement goals.

Regardless of your resources, retirement is going to have a price tag attached to it like everything else. Knowing what your financial targets are makes it easier to brainstorm how you can get there. If you want to back into your budget based on how much income you are currently on track to generate in retirement, use this retirement estimator calculator to help you visualize your future retirement income potential.

Plan to delay and maximize Social Security.

Although entering retirement with less savings than you originally planned can make it very tempting to claim Social Security as soon as possible to generate some cash flow, this decision may actually backfire. Once…

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