Late starters usually worry about the amount of savings they can amass before retirement. However, it’s never too late to start saving for that golden sunset. Below, we’ll discuss six effective strategies late starters can adopt to increase their retirement savings.
1. Max Out Retirement Accounts
Late starters should aim at maximizing their annual contributions to their retirement savings accounts. If you are 50 or older, you have the advantage of higher catch-up contribution limits ($6,500 for 401(k)s and $1,000 for IRAs in 2021).
2. Prioritize High-interest Debts
High-interest debts can take a toll on your savings growth. Paying off high-interest debt like credit card debt should be a priority, as it can save you thousands of dollars in the long run.
3. Postpone Social Security
Delay taking your Social Security benefits as long as you can. The earliest you can start taking social security is at age 62, but the longer you wait, the higher your monthly benefits, up to age 70.
4. Downsize Your Lifestyle
You can save more by cutting unnecessary expenses. Downsizing to a smaller home can reduce monthly expenses significantly. Reducing daily expenditures like eating out or purchasing non-essential items can add up over time as well.
5. Increase Income Streams
Consider part-time work, freelancer opportunities, or even a small business that can provide additional income. Earnings from these sources can either supplement your savings or cover living expenses to allow your retirement funds to grow.
6. Consult a Financial Advisor
A financial advisor can provide tailored advice based on your individual circumstances. They can help you develop a saving and investment strategy that optimizes your retirement funds.
In summary, while starting to save late isn’t an ideal situation, it’s definitely not a hopeless case. With the right plans and actions, it’s possible to build a comfortable nest egg for your retirement years. Remember, it’s better late than never.
