5 Steps Help Start Saving for Retirement When Your 40

by | Feb 12, 2016 | Financial Services

While trying hard to save money toward retirement, there seems to be other things getting in the way such as debt, hard times, kids tuition, or just the simple act of procrastination. If this keeps happening to you, you are not the only one. One out of three workers between 35 and 44 have not even saved $1,000 for retirement. Additionally, there are only approximately 53% of Americans participating in plans at work for retirement.

When it comes to retirement planning, time is essential. However, if you are far behind it is not too late to begin saving. There are some easy ways to help build up your funds for retirement while in your 40’s, and end with a nice amount.

1. Determine the Number Needed for Retirement

There are varying opinions about how much money you need to retire comfortably. There is not any number that fits in with everyone, each person is different. You need to figure what you need exactly, then begin your retirement planning around this number.

2. Begin to Gradually Increase Your Savings

In most cases, 10-15% of your yearly income is recommended to be saved for retirement. Due to starting late, you may need to save more. Try to save 20% from your paycheck, if seems to hard, have an amount automatically sent to a saving account.

3. Reduce Your Debt

Get rid of outstanding debt. Pay loans with high-interest first, such as credit card. If you have a debt amount which is too large, look at alternative solutions. If not, your retirement may be compromised. Possibly consolidate your debt to a low-interest loan or zero-interest card.

4. Reduce Spending

Think about how much money is spent on unneeded items, over time this adds up. Imagine spending $5 on a latte at age of 40 which by time you reach 80 compounds to more than $1,000. Now think of spending that $5 many times in one week that can add up to tens of thousands. Rid yourself of this loss by spending a smaller amount of items not needed, such as dining out, cable, and shopping. Pocket the amount you are saving in your retirement fund.

5. Map Your Future

It is a big milestone hitting 40, and a huge task is saving money for retirement, but you still have a good 20-25 years to go. It is smart not to do this alone, but to find a financial adviser to assist you with your retirement planning, helping you stay on track of your goal.

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