Get Your Retirement on Track in Your 40’s
If you are approaching, or currently in, your 40’s, retirement is not so far off. If you were not able to do much saving or investing in your 20’s or 30’s, you may be feeling a little behind the curve. Not to worry as there still is time to get your retirement planning on track. Being in your 40’s gives you a great opportunity to start now. At this stage in your life, you may have a steady job and be earning more than you were in your earlier years. You probably have set expenses each month such as a car payment, mortgage and other living expenses. This can make creating a retirement plan much easier for you because you have set numbers to work with each month.
To get on track, you will need to start investing money now to utilize the power of compounding and set yourself up for an enjoyable retirement. Since you will still have 15-25 years before you retire, you have a lot of time for your investments to grow. Having a long investment horizon is one of the best ways to set yourself up for success.
The more the better
Save. Save. Save. If you have not already done so now is the time to create a budget of your set expenses each month, your monthly income and see the difference between the two. Save as much as you can each month because this will help you retire on time. Make cuts to expenses, where possible, and add the extra money to your investments. By writing everything down, you often see expenses that you don’t really need or can reduce.
Jean Chatzky, CEO and co-founder of HerMoney Media in New York, says, "People should be saving 15% of whatever they earn." Stick to this as a minimum and work your way up. If you have little savings, in order to catch up to where you need to be, you might need to save up to 20% of your income each month. Work your way up in increments, so your budget is not completely shocked.
Work on debt
Debt can be an enormous hurdle when trying to save, especially when interest charges are factored-in. It can set you up for failure if you don’t take control of it soon enough or in the right way. If you are in your 40’s and have credit card debt or student debt, now is the time to make a plan to tackle it. Do your research and find a method for paying off debt that fits with your lifestyle. It is often best to pay down your debt with the highest interest first and go from there.
Once you are debt-free or have low interest costs on your debt (for example on your house mortgage), you will be able to get aggressive in your retirement savings and investing!
Calculate your perfect number
Now that you know where to start, you will need to find out how much money you will need for a comfortable retirement. Find a retirement calculator online, or roughly calculate what 70%-80% of your annual salary is. This is what most experts suggest you will need per year for a comfortable retirement.
Another popular option these days is to work longer, maybe working part-time in your mid to late sixties. People are living longer and feeling healthier, so the longer you work, the more time you have to save for retirement and not dip into your retirement savings. Working three to five years longer could massively increase your retirement income.
If you are interested in learning about a complete retirement plan in one simple financial product, please reach out to me at email@example.com, or call/text at 778-951-2806. I would love to help you or anyone you know retire on time.
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