According to CNBC News, it’s never too late to start saving for retirement. If you’re starting your nest egg at age 50, you’ll need to allocate more funds towards investing and choose a conservative approach. Also, as you get closer to retirement, less of your investments should be in stocks (which are volatile to market conditions) and more should be in individual retirement accounts (IRAs) and diversified 401(k) plans. This will help you take control of your retirement future.
Determine how much money you will need to meet your retirement needs (and wants). Add up expenses and come up with a realistic monthly income amount.
Check out retirement calculators. Investment calculators, like the one offered by CNN Money, allow you to estimate your retirement savings based on your age, current income and your desired income at retirement. This will allow you figure out how much to save each month for retirement.
Consider investing in individual retirement accounts (IRAs) which allow you to make tax-deferred contributions. Tax deferred means that you don’t pay taxes on your earnings until you withdraw the funds. IRA contributions may also be deductible on your tax return. Ask your accountant for details.
Check out employer sponsored retirement plans, such as 401(k)s. In your 50s, it’s important to take advantage of your employer’s 401 (k) plans (if they offer it). These contributions are deducted before taxes, which means it might knock you to a lower tax bracket (which saves you money).
Ask about pension plans. Even if you’re new to an employer, you might be able to take advantage of pension plans. These plans pay you a certain percentage of your income (based on your years of service) upon retirement. Some companies provide benefits starting at five years of service, which could help supplement your retirement income.
Consider talking with a financial planner. These professionals are available at many financial institutions and can help you develop a retirement investment strategy. They may charge a fee, but it can be worth the investment.
Don’t forget to maximize your employer 401(k) contribution. For example, if an employer matches every dollar (up to 5 percent) for your 401(k) plan, make sure to meet the minimum requirement. This allows you to take advantage of “free money.”
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