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Got a Late Start on Retirement? Here’s How to Fix It

4 Minute Read

Something happens when you turn 40. First of all, you realize the big 4-0 isn’t nearly as ancient as you thought it was when you were 22. You also decide that reading glasses are actually pretty handy—and the right pair can make you look quite distinguished.

On the other hand, you realize that retirement isn’t as far away as it used to be. And you can no longer ignore the fact that at the rate you’re going, you’ll never build up enough of a nest egg to kick back and enjoy retirement—if you’re able to retire at all!

But if there’s anything else you’ve learned in your 40-odd years, it’s that time changes many things. And if you’re smart and you take action now, you still have enough of it to change your retirement outlook completely.

Use What You’ve Got

If you’re like most folks in their 40s, you probably have around $10,000 saved for retirement—so you’re not totally unfamiliar with retirement plans and how they work. You simply haven’t been making the most of them. Assuming you have no debt except for your home and a decent emergency fund to keep you afloat in tough times, there’s nothing holding you back from taking full advantage of your retirement savings options by investing at least 15% of your income right away.

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Here’s where you can reap at least one of the benefits of age: a higher salary. People age 45–54 are at or approaching their peak earning years, averaging more than $55,000 in annual income. That means you can invest $8,250 a year for retirement, compared to the average 25–34-year-old who can only put aside $4,900.

Investing at that rate from age 45 to age 65, you could have more than $585,000 for retirement! That’s a vast improvement over $10,000, isn’t it?

A $315,000 Turnaround in 10 Years!

But don’t stop there! Focus on paying off your mortgage as fast as you can while socking away your 15% for retirement. Not only will owning your home free and clear mean you can enter retirement with a huge asset in addition to your retirement savings, getting rid of your mortgage allows you to pump up the amount you can save for your golden years.

Let’s say you’re 45, you’re making $55,000 a year, and you have a $1,000 monthly mortgage payment. For the next 10 years, invest 15% of your income for retirement and commit to paying an additional $500 a month on your mortgage.

In that time, you could pay off a $145,000 mortgage balance while building up your retirement savings to around $170,000.

Now you’re 55 and retirement is right around the corner, so you put the pedal to the metal. You increase the amount you save each month by $1,000—your old mortgage payment amount.

Over the next 10 years, you could build your nest egg up to nearly $800,000!

In 20 years, your retirement outlook has done a 180. You’ve got a paid-for home and a more-than-decent amount of retirement savings waiting for you.

What a Difference a Little More Time Will Make

But what if you kept things going from age 65–70? It’s not an option for everyone, but if you’re in good health and enjoy your job, working another five years is a great choice—not only for your mental health but your financial health as well.

If you continue investing the same amount for the next five years, you could retire at 70 with more than $1.4 million!

Get Ready to Work for It!

We’re not saying this is an easy plan to pull off. It’s aggressive, and you’ll have to commit to it fully to be successful. It will mean some significant lifestyle changes and a shift to focus on your long-term goals instead of today’s.

It’s also not a plan you want to tackle on your own. You’ll need the advice of a financial professional to help you choose your investments and keep your plan on its tight timeline. The point is, you can do it—but you need to get started now.

We can help you find an experienced investing professional in your area who you can trust to show you how to get started on your own plan right away. Don’t waste any more time wishing you’d started saving earlier. Take action and change your retirement outlook today!

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