There are retirement planning strategies you can do right now that can make a difference, no matter when you start.

Help! Is It Too Late to Start Retirement Planning?

When we first start out in the workforce, retirement typically seems far, far away. Many people don’t start actively investing in savings with competing demands for every dollar. Then the years go by, and they suddenly find themselves in their forties or even fifties with a fear that they might be too late. The good news is that it’s not. There are retirement planning strategies you can do right now that can make a difference, no matter when you start.

Start now!

This tip can seem obvious but it’s where many people get stuck. Fearing they’re beginning too late often causes people to feel overwhelmed and thus paralyzed to act. They put it off, and more time passes. Instead the best way to start retirement planning is simply to start. Sit down, evaluate the numbers and start putting money away, even if it’s just into a savings account. By starting today, you’ll have more than you did yesterday, and more than you did if you never began at all. Just do it.

Save as much as possible – in the best way possible

Another factor that triggers fear in late starters is that they will never be able to save enough. But it’s important to not let that stop you. Saving $500 a month in an account with 6% return over the next 15 years can result in more than $145,000. If you can double that, you’ll accrue more than $290,000. Then, based on a 4% withdrawal rate, that investment would produce just under $12,000 a year in retirement income, which can be a good supplement.

To earn 6% interest, you’ll likely need more than a regular savings account. This is time to evaluate the best savings options across the board.

If you can, invest in a 401(k) through your work. These accounts let you contribute up to $18,500 a year, plus an additional $6,000 if you’re starting to save after age 50. The 401 (k) offers tax advantages, in which your money grows tax-free and is not charged until you use it during retirement.  If your employer doesn’t offer a 401(k) plan, you can open an Individual Retirement Account or IRA, which allows you to sock away up to $6,000 a year, and an extra $1,000 if you are 50 or older. M C Bank offers both a Traditional IRA and a Roth IRA. The traditional IRA is similar to the 401(k), as your money grows tax-free and is not taxed until you use it during retirement. The tax advantages to the Roth IRA are seen in retirement, the withdrawals are not taxed as your contributions to the account are “after tax”.

Other products offered at M C Bank, that may not produce as big of yield are CDs and money market savings accounts. A CD is purchased for a certain price and for a specific term limit. The money in the CD serves as your deposit and earns a competitive interest rate throughout the course of the CD. It’s an effective savings tool because it can earn more than a traditional savings accounts, and you cannot withdraw money out of the CD without incurring penalties, which can serve as an incentive to save. Money market savings accounts also offer a better interest rate than savings accounts, but the funds can be easily accessed up to six times a month with a check or debit card, which can make it more tempting to spend your investment.

Rethink Lifestyle

Finding that extra $500 or $1,000 a month to start saving for retirement will likely involve cutting corners where you can. So, it’s time to think: Do you need that new car? Can you wait on that next exciting purchase? How much are you spending every day with really nothing to show for it? Committing to retirement goals calls for looking honestly at your lifestyle and making trade-offs where you can. You may find that savings quickly add up by just making some basic lifestyle changes:

• Minimize your number of cable channels
• Plan your meals for the week to reduce eating out or ordering in
• Make your coffee at home!
• Wait 48 hours before making an unplanned purchase

This of course means lifestyle changes before you retire that can have the most benefit later. There are also lifestyle changes you can make after you retire that can result in your retirement savings going further. Some retirees supplement their income with a part-time job. This not only takes the edge off spending, but it can keep the mind engaged and active. Another thing to consider is retiring somewhere new that has a lower cost of living. By downsizing and relocating you can reduce expenses and help your savings go further.

Give yourself more time

If you started late in saving, another strategy is to add more time to the backend for more saving. For many people, 65 is the target age for retirement, but aiming to stay on the job till 70 has its benefits. Social security benefits increase if you wait to start receiving benefit payments. This means you may be able to increase your social security payment just by working a little longer. Retiring later also gives you more years to invest in your retirement accounts – and fewer years in which you’ll be drawing down from them.

Consider a financial advisor

Finally, if you’re late to the game of saving, it may be an ideal time to call in an expert. A financial advisor can help you hone-in on aggressive strategies, with more insights than you might have on your own. Look for a consultant who is familiar with retirement investments and who does not charge an exorbitant fee.

If you haven’t started saving for retirement yet, do not panic. There are a lot of people in your shoes, and there is hope. The most important step is the first one.