Nobody likes the feeling of being behind. When it comes to putting away money for your life after work, this is especially true. As a retirement planner in the Irvine area, I’ve seen a variety of clients at all stages of saving for retirement. One thing that is true is that with the right diligence, no matter how far behind in the savings process you are, it’s never too late to put together a meaningful retirement. Here are some general principles to observe.
Debt comes first
If you’re a little behind on savings, it can feel like you’re trying to put out multiple fires at the same time. Monthly payments on debts can dramatically cut into the amount that you can put away for retirement. All the same, knocking out debts before they become a nagging addition to your monthly expenses after you retire can ensure that whatever your savings may be, it goes further. Working with a financial planner to eliminate that debt in the most efficient way possible can really save you in the long run. Strategies like consolidating debt or even using distributions from your retirement accounts to eliminate the debt may make sense in your situation (check with a professional first!).
Make sure you’re getting the most out of your tax-deferred accounts
You do this by putting the maximum amount that is allowed into your account (you didn’t need a financial planner to tell you that, did you?). In addition to this, though, I’ll underscore the importance of trying your hardest to meet your company’s employer match, if you’ve got one.
There are annual maximums for your contributions to your 401(k) and IRA, at $18,000 and $5,500 respectively. But if you’re playing catch-up in your savings scheme and you’re over 50, you’ll be able to contribute more to each type of account—$6,000 more for your 401(k) and $1,000 more to IRA(s). Even if you’re 50+ and feel your nest egg to be underwhelming, putting away your maximums each year will really make a difference in feeling prepared once retirement comes.
Consider working longer
No matter how drastically you cut expenses to bolster your savings, there is just no comparison to working a few extra years, if you can muster it. If you work an extra year, you’re not just adding an extra $10-20,000 or so to your savings. In addition, you’re adding the entire year’s salary, which you wouldn’t have had if you’d retired. This means a few extra years of work could translate to an extra $100,000 or more on the table for retirement—which is substantial if you started late in the savings game.
Focusing strategically in the abovementioned ways can turn your retirement planning around—even if you consider yourself behind the curve. If you’re seeking a financial planner in the Irvine area, give us a call at Miramontes Capital. We’d be happy to give you some encouragement on your savings plan.