Over 40? Never too Late to Save for Retirement

From a retirement planning perspective, the decade between your 40th and 50th birthday is a time when, if you haven’t started saving for retirement, you definitely should.  Of course anyone who started putting money away before then is going to be better positioned financially than you are to meet their long-term retirement goals, but the good news is that there’s still plenty of time to shore up your savings even if you’ve been hitting the “snooze button” on your retirement plans for the last 20-odd years.

Gregory Olsen, a certified financial planner with Lenox advisors, says that “for a lot of people, they celebrate their 40th birthday in earnest”. He also says that, luckily, most 40-somethings have the maturity and insight to be able to better project their future income needs and accurately predict what they’re going to need in order to keep up their lifestyle once they retire.

That actual numerical figure will differ for everyone, and depends on exactly when you plan to retire, what you are life expectancy is and whether you envision a “low-budget” retirement or have plans to take trips to Europe and eat dinner at the golf club every night.

On the Social Security Administration’s website you can find a Life Expectancy Calculator that will offer you general guidelines on how long you’ll possibly live, but the results you get from that calculator will need to be adjusted to reflect not only your present health but also any health risks or concerns that might be familial.

Once you start to actually estimate your expenses in retirement, you’ll need to remember to factor in the basics like food, housing, transportation and of course healthcare. While your home may be paid off by the time you retire, healthcare costs and other expenses won’t be, and may actually become higher the older you get.

Determining how much you’ll get from guaranteed sources of income, including Social Security, pensions and, for a few lucky people, trust funds, is your next step. Using the Social Security administration’s website you can determine what your future benefits are going to be quite easily, but the others may need more work.

Once you’ve determined the difference between what you’ll likely spend and what you have in guaranteed income, you’ll have a number that you can use to determine how much your savings will need to be in order to maintain your current standard of living. Most financial planners will tell you that you should save at least 15% of your income every year as well as maxing out any tax-deferred retirement savings plans that you have like IRAs, 401(k)s and Roth IRAs as well.

One of the best ways to improve your financial prospects and be able to live longer on your retirement savings is to stay as healthy as possible, including eating well and exercising regularly. If you smoke you should quit and if you’re overweight you should definitely consider dieting, as one of the biggest retirement expenses is the cost of healthcare.

Finally, starting to save right now is vitally important as you got a lot of catching up to do. It will be impossible for enough away to retire comfortably, but you’re definitely going to need to put a lot of thought and work into it and stash as much money away as possible.

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