55 And Haven’t Saved A Dime?
January 2008
Every financial planner will tell you that the secret to having the money you need in retirement is to start early. But what if you’re 55 and you’ve never saved anything for retirement? Is there any hope for your situation? Yes, there is hope, but it won’t be easy. Here are five suggestions for people who are starting late in their retirement planning.
1. Honestly evaluate your situation. Physically make a list of everything you have and everything you owe. This will help you know where you are currently.
2. Know how much you will need. Calculate the amount of money you will need to retire. A general rule of thumb is you will need around 10 times your salary when you come to retirement. Let this amount motivate you, not discourage you.
3. Pay yourself first. One of the best things about investing through your employer’s 403(b) or 401(k) is the fact that you can choose in advance to have money sent to your investment account each pay period. Also, your employer may have a matching plan. This pay-yourself-first principle is key to helping you reach your goal. You are in crisis mode. After your tithe, it is time to take care of you and your spouse first.
4. Control expenditures. Set up a spending plan and work that plan. Identify your budget busters, such as eating out or spending too much on clothes. Don’t put anything else on credit cards.
5. Plan to work longer. You may need to get into the mindset that you will need to work past the normal Social Security retirement age. For you, retirement may need to come at 68 or 70. And you may need to work part time for many years after your full-time employment ends.
Can you get there by starting at 55? Yes, but it won’t be easy. I met one couple who recently retired. They told me they had always served small churches, and when their children graduated from college they realized they were in serious trouble with regard to their retirement planning. The wife had gone to work to help with college expenses. They decided she would continue to work and put everything she made for the next 10 years into their retirement accounts and IRA’s. Their hard work and planning allowed them to retire with over $300,000!
Don McLeod, CFP® is a director of relationship management at GuideStone Financial Resources of the Southern Baptist Convention.
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