Other Retirement Facts:
Today’s Hack
Do you feel behind when it comes to your retirement plan? You may think they are in bad shape when in reality you might be better off than you realize! Often we start the planning process and see that everything will be ok. You may need to make up some ground but that’s no reason to panic. On today’s episode, we will talk about some ways you can catch up in your retirement plan if you need to. These are also great tips for all pre-retirees looking to save a bit more.
Catch-up Contributions
Once you turn 50, the government allows you some catch-up contributions. This usually coincides with your peak earning years and can be a great way to put more away as you inch closer to retirement. For a traditional IRA or Roth IRA, you can put in an additional $1,000 per year. With more traditional retirement accounts like a 401(k) you can put in an additional $6,500 per year. You likely still have around 15 working years left to save this money.
Kids Are Coming Off the Payroll
As much as we love them, our kids cost a lot of money! But as you get closer to retirement, they should be coming off your payroll and this can open some room in your budget to save more. It’s important to think of this consciously, the more you can save now the less you’ll be a drain on their finances in the future.
Eliminating Debt
You’re getting older and are probably starting to pay off those big debts and avoiding new big purchases. You’ll be paying off the cars, the boat, the house. Now that you aren’t paying those monthly bills you can put that money away for retirement. A lot of people end up spending this money but think about how that money could help your plan. Adding up all the little pieces can make a big impact in catching up.
Downsizing
This one is difficult in this housing market. However, depending on where you buy and your future plans, downsizing can still save you some money. Generally speaking, you’ll probably end up with some equity. Don’t let that just disappear. That extra money can help you. Maybe you aren’t downsizing for money but for space. Still think of ways that money can fit into your overall plan.
Twilight Career
We often talk about having a part-time job or a consulting career going into retirement. A lot of people are drawn to this idea as a way to prevent boredom, but it can also be a way to support your retirement plan if needed. If you’re going to work why not save that money? Maybe it’s only for a few years and then you can fully retire. This doesn’t mean you have to stay in your current career, it’s about finding something you enjoy that could help you supplement your income.
Listen to the entire episode or skip ahead using the timestamps below.
[0:54] – How do you know you are behind?
[2:24 ]– Catch-up contributions
[5:12] – Kids are coming off the payroll
[7:01 ]– Eliminating debt
[9:30 ]– Downsizing
[13:28 ]– Twilight career
A Quotable Moment:
“If you qualify, this is something additional you could put in to help catch-up, make up for lost time. ”
-Phil Putney