Getting a Late Start on Saving for Retirement

20 July, 2016 – If you’re in your 40s or older and don’t have any money set aside for retirement, you’re not alone. But it’s never too late to start building a retirement fund with a carefully planned savings and investment strategy.

Nearly 44 percent of working-age head of households who are between the ages of 45 and 54 do not own any savings in a retirement account, according to the National Institute on Retirement Security. That number only drops slightly to 41 percent for people between the ages of 55 and 64 who do not have any retirement assets.

“The ideal time to start saving for retirement is in your 20s,” says Susan Herendeen, CFP®, a wealth advisor and vice president with Tompkins Financial Advisors. “You’ll have enough to work toward growing your nest egg for the type of retirement lifestyle you are working toward.” At this age, smaller contributions have the potential to add up over your working life through compounding.

Yet if you missed this opportunity — no matter what your age is now — you need to start saving immediately. You may not attain the kind of retirement you’ve always dreamed of, but you’ll have the opportunity to get closer to it if you start saving now.

Take a More Aggressive Approach

If you’re approaching middle age with little or no money set aside for your retirement, you’ll have to start saving as much as you possibly can. A great place to begin is the standard tax-advantaged saving plans, such as 401(k)s and IRAs. If you’re older than 50, you can contribute up to $30,500 per year between these two options.

Securing a comfortable retirement at this stage in your life, however, means that you’ll have to do more than contribute the maximum amount to your retirement accounts. You’ll also need to supplement your contributions with savings accounts and investments.

The amount you save and the strategy you use should be aggressive, says Herendeen. This will help you pursue the goal of accumulating more in a shorter amount of time. Choose stocks and other investments that may enable your savings to grow more rapidly.

Yet it’s important to note that these investments come with a tradeoff and will expose you to greater market risk and volatility. If you have less tolerance for taking on such risk, consider a more balanced fund with both stocks and bonds, rather than one with all stocks.

Cut Your Expenses

Generating more money for retirement savings means that you’ll have to reduce your current expenses.  Consider skipping that daily lunch out or that expensive latte on your coffee break. Instead of a vacation cruise to the Bahamas, take a car trip to a nearby lake or beach.

Herendeen advises that you should also rethink your retirement goals. Commit to spending less after you retire, and forego that second house on the beach. With a scaled-back retirement, you’ll need less money to pay for it, and you’ll also give your savings more time to potentially grow.

Consider downsizing your house as a way to generate more savings. If you’re an empty nester, trade in your four-bedroom house for a multi-family home or an apartment. Or move to a less expensive city or state, where you won’t be overburdened with high property taxes.

Delay Retirement

If you’re catching up on building your nest egg, you may have to delay retirement past 65. This will buy you more time for your savings to have the potential to grow, and ultimately, your savings may not need to last as long.

Waiting to draw on Social Security will also help. If you delay withdrawing Social Security until after you reach 62, your benefit will increase 8 percent each year until you reach 70.

Finally, if you’re not sure how to plan for your retirement in middle age, consult a financial professional for advice. A financial advisor will help you develop a plan that will leverage your resources to build a comfortable retirement that you can look forward to.


Some of this material was prepared by Forefield/Broadridge for Tompkins Financial Advisors. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

We suggest that you discuss your specific situation with your financial advisor prior to investing.

Investing in stock includes numerous specific risks including: the fluctuation of dividend, loss of principal and potential illiquidity of the investment in a falling market.

Investing involves risk including loss of principal. No strategy assures success or protects against loss.

Investment Services provided through Tompkins Wealth Advisors. Trust and Estate Services provided through Tompkins Trust Company. Securities and advisory services offered through LPL Financial, a Registered Investment Advisor, Member FINRA/SIPC. Insurance products offered through LPL Financial or its licensed affiliates. LPL Financial is a separate entity from Tompkins Financial Advisors. The investment products sold through LPL Financial are not insured Tompkins Trust Company deposits and are not FDIC insured. These products are not obligations of Tompkins Trust Company and are not endorsed, recommended or guaranteed by Tompkins Trust Company or any government agency. The value of the investment may fluctuate, the return on the investment is not guaranteed, and loss of principal is possible. Tompkins Financial Corporation, Tompkins Trust Company and Tompkins Wealth Advisors are not registered broker/dealers and are not affiliated with LPL Financial.

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