Thirty-six percent of Americans surveyed say they have less than $1,000 saved for retirement. Sixty percent have less than $25,000 put away.
That means the rest of us will be supporting a lot of people at just above the poverty level, or they will have to do a lot of catching up.
Here are a few ideas to help you play catch-up on your retirement savings:
Low-cost investments put more money in your pocket, and low-cost ETFs are a great way to get started. Morningstar research indicates low-cost funds consistently beat high-cost funds in every category.
Next, rethink low-risk investments. Late starters have to take more risk. They need higher returns and that means higher risk. It’s a rougher ride, but one you have to take to make it.
And, the most obvious, delay Social Security for as long as possible. Delaying increases your monthly income and will allow you to contribute more to your retirement plan at work, too.
Sixty percent of people claim their benefits as soon as possible, and it is big mistake. Waiting to claim your benefits will increase your return by 0.5% every month you wait.
You just don’t need a big house in retirement. Reducing your expenses will make a huge difference. And carrying debt into retirement eats income. It doesn’t generate anything.
Save, even in retirement. You can’t contribute to an IRA after the age of 70 1/2, but you can save and it is essential.
Finally, as I said a few weeks ago, plan on emergencies. Yes, roofs leak and transmissions go out in retirement, too. You have to have a plan to provide for emergency expenses.
It is never too late to prepare for retirement. Do it today. You don’t want to wake up broke in your ‘80s.