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It’s Never Too Late to Save and Invest!

Most investing advice out there seems to be geared towards people just starting their careers. But what if you’re in your 40s or 50s and have never saved for retirement? You won’t have the decades of compound interest that a younger worker could count on. But you can still improve your retirement years by saving now.

The first and most important step to saving for retirement mid-career is to know where your money is going now. If you don’t already have a budget, now is the time to sit down and make one. Start by writing down all of your sources of income. If you do freelance work or have a side job, don’t overestimate!

Then, write down every monthly bill you have, from phone service to utilities to student loan payments. Once you’ve done that, work on tracking every penny you spend for a week or two. That will give you an idea of where you might be losing—or wasting—money. Look over what you’ve written. How can you cut spending and free up some cash for your retirement savings?

Paying down debt can make a huge difference in how much money you’ll be able to put away each month. Try using the debt snowball method to put available money towards your debts. If you need some help figuring out your budget and your debts, financial counseling can help. Our partners at Greenpath Financial Wellness can help you put together a plan that works for you.

Next, look at your savings options. If your employer offers a 401(k) or pension plan, this is a simple way to get started. If you are able to max out your contributions, that’s a great option. Some workplaces offer matching contributions, which can really grow your savings. And if you’re over 50, you may be able to make extra contributions to a 401(k) or IRA to help you “catch up.” A 401(k) or a traditional IRA also offer the advantage of tax savings.

A Roth IRA can be a good option if you want to put more money away. Roth IRAs can also help you save if your employer doesn’t offer a retirement plan. A Roth IRA won’t have the long-term tax savings of a traditional IRA. But Roth IRAs do allow your money to grow tax-free, and you’ll avoid capital gains tax as well.

Another way to invest in your future is to open a new investment account. This can be tricky, so you may want some help from professionals. You’ll need to consider your age and your target retirement age as you decide how much risk you’re comfortable with. Our partners at Wealth Solutions Group can help you put together an investment and estate plan that will work for you and your family.

If you still have kids at home, don’t skimp on your retirement savings to save for their education. They’ll have other options to help pay for college. If you want to be financially free in your retirement years, you may have to allow your children to assume some of the responsibility for their own educational costs.

You might need to play catch-up if you haven’t invested or saved earlier in your career. But with a few changes, you can take steps to invest in yourself and make plans for your future.

Photo by LinkedIn Sales Navigator on Unsplash

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