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What Should You Do When You’re Nearly 50 and…
By JLP | June 26, 2006
you have little money saved? That’s what this article from the July issue of Money attempts to answer. My first reaction is to be judgemental. However, that does nothing to help this person’s situation. Telling a person what “they should have done…” is pretty much worthless. All it will do is make them feel worse.
In my opinion, if you are older and haven’t yet started to save for retirement, GET STARTED NOW! Any little bit will help. If your income is decent and you are willing to cut costs, YOU CAN save a lot of money. However, you have to have the desire to do so. It will also call for sacrifices. You may not be able to eat out as often or buy as many clothes as you are used to. You may have to take a vacation in your backyard.
Those over 50 have the opportunity to save $20,000 per year in their 401(k) if their company allows that much and another $5,000 per year in an IRA or Roth IRA if they don’t make too much money. That’s $25,000 per year! If you can swing that each year and get an 8% return on your money, you could have over $678,000 by the time you are 65. Amazing isn’t it. Here’s a look at the numbers:
I’m sure it would be tough for most people to scrounge up $25,000 per year. I never said it would be easy. However, in a lot of cases it all boils down to that old saying, “where there’s a will, there’s a way.”
Topics: Retirement Planning | 5 Comments »
June 26th, 2006 at 7:58 am
It seems like the article-writer is trying to make it seem like there is still plenty of time and in fact no hope is lost at all, but realistically when real people over 50 who haven’t saved anything look at the kinds of numbers that they need to start coming up with pronto (like $25k a year) they simply give up, or put away too little and tell themselves that they’re doing a good job. I also dislike how a lot of these types of articles use working until you’re 68 or 70 as a retirement plan. Most people simply can’t work that long, or can’t get a job that will allow them to keep pulling in that kind of money.
June 26th, 2006 at 11:32 am
Too bad she had been a renter all these years. Her balance sheet could have looked a whole lot better if she had dipped her feet into the real estate market (instead of those cute shoes she was wearing!)
Perhaps she should consider spending her retirement years in an area with a lower cost of living, to help her stretch whatever savings she is able to accumulate.
June 26th, 2006 at 1:29 pm
Kira:
People certainly can work until they are 68 or 70, if they choose. Heck, that is what people used to do. One of the biggest problems facing retirees today is feeling entitled to retirement. While I wish everyone could retire, I am not going to shoulder the burden for them. They have a lifetime full of decisions that contribute to their financial outcome, and that is no one’s fault but their own.
People who are in their 50′s need to take a serious look at their lives and figure out what they can do, if they have little-to-no savings. They will be in much better shape if they have owned a home, as they can either tap into the equity, or they can at least avoid housing expenses if they have paid for their home.
I really think the article is off-base saying that people should wait to receive their SS benefits until they are 66. I did a calculation in the past, but if you start receiving the benefits as soon as you are eligible and sock them away, the three years you have accumulated can more than make up for the increase you would have received for waiting.
June 26th, 2006 at 5:03 pm
I have always read that you should take Social Security at 62 as it is almost always a better deal.
September 5th, 2006 at 9:06 pm
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