What are Some of the Challenges Late Starters
Have to Face in Building Their Retirement Savings?
If you want to build your savings and have a financially secured retired life then best thing to do will be to start early. But if you haven’t been able to do so, its not too late and you can start saving even if you are in late 40’s. Our aim here will be to analyze some of the things you will have to do for building your savings for your post-retirement life.
How late starters can build their retirement savings?
Some of the important steps investment planners advice late starters should take for building their retirement savings include:
- Analysis of Present Situation
- Repayment of Debts
- Implementation of Lifestyle Changes
Let us go through each of these steps in the following sections.
Analysis of Present Situation
Since in late 40’s you are quite close to your retirement age, it will be necessary to make some important decisions.
- You need to figure out where to stay after you retire. Selecting a place will be important as retirement savings can be seriously affected by cost of living. If you decide to live in any small city then you will have far less expenditure in comparison to cost of living in any metropolitan city.
- Next task will comprise evaluation of financial position you are in and liabilities you have (like mortgage or a car loan). Additionally, monthly bills are to be analyzed to understand how expenditures can be reduced.
Repayment of Debts
You need to consult investment planners on ways existing debt can be paid off and have more funds to build savings. Let us look at one example of how you can increase your savings by paying off debt. Suppose, you are making a payment of 17% interest on your credit card while 9% interest is being earned from retirement account. This will be a clear loss and you will not be able to build higher savings. In such situation you need to consult investment planners on how credit card can be paid off so as to have more money in hand to make suitable investments.
Implementation of Lifestyle Changes
Implementing lifestyle changes will become important for late starters to achieve goal of building a nest egg. Some of the aspects you will have to look into are:
- First you will have to consider whether you can move into a smaller home to reduce your expenditures. This will be the most practical thing to do after kids grow up and start living separately. In such situation you can make considerable savings by shifting to a small home.
- Another thing you can do to increase your savings will consist of replacing your luxury car with some standard car which is not very expensive to maintain.
We will conclude here with a final note that retirement planning can be started at any age. But the aspects to analyze will change considerably according to situation you are in at that age. Thus, by consulting investment planners you will be able to understand your position and take right decision to build up retirement savings.