Saving in Your 40s and 50s: It’s Never Too Late to Get Started

When saving for retirement, there’s one question people ask themselves more than any other: Will I have enough money? It’s a common question for a reason, and it’s one that has increased in magnitude lately — especially for people in their 40s and 50s.

In a May 2013 study, the Pew Charitable Trusts found that during the recent recession, people born between 1966 and 1975 had suffered the most of all age groups, losing 45 percent of their wealth from 2007 to 2010. According to one report, Americans in this age bracket alone lost an average of $33,0001.

The feeling of frustration can be overwhelming. You’ve been working hard for over 20 years. You’ve been saving as much as you can. Then, the market crashes, and your savings disappear. Know that you’re not alone and that it’s not too late to bounce back. It’s also not too late to start. Even if you’re 55 years old and decide that today is the day to begin saving in earnest, you still have time to build up income for retirement.

On Your Mark, Set Your Priorities, Go

The best place to begin is right in front of you. You determine what you want out of your retirement. What are your priorities? Sit down with a pen and paper and start a list. Empower yourself to make the important decisions today that will set tomorrow in motion:

  • When do you want to retire?
  • Where do you want to live?
  • What kind of lifestyle do you want to lead?
  • Consider your current lifestyle. Can you cut back to save more for retirement?

These are just some of the questions you should be asking — and answering — yourself. So take the first step and start making some decisions.

Save More, Spend Less

The most obvious advice still applies: save more, spend less. But there’s more to it than that.

Create a budget to help you stay on track — and actually stick to it every month. Get out that pen and paper again and decide where you can trim your expenses. What can you live without now so you can have more later? If your budget isn’t working, you may want to consider downsizing to a smaller home or a less expensive location to help maintain your standard of living. This may be a difficult exercise, but remember you’re trying to catch up.

Speaking of catching up, if you will be age 50 or older at the end of the calendar year, you can take advantage of catch-up contribution options to accelerate the growth of your retirement accounts. The IRS updates contribution limits periodically; checking for the most recent information can help ensure that you are making the most of the options available to you. The bottom line — make the maximum contributions possible to your employer’s retirement plan, including any available catch-up options.

Think Outside the Box

There are certain financial products and savings instruments that you may not be familiar with, but that may help you get more out of your money. A trusted Financial Professional may be able to suggest options you haven’t yet considered.

Delay Retirement (The Beach Will Wait for You)

People are working longer than ever before, and this can make a big difference in having enough retirement income. Delaying your retirement by three years from age 62 to 65 can boost your assets by more than a third — thanks to the combination of making extra contributions to your employer-sponsored retirement plan, not taking withdrawals and allowing your funds more time to grow.

In addition, if you anticipate receiving Social Security retirement benefits, it’s important to understand that monthly benefits differ substantially based on when you start receiving them and the filing option you choose. For every year you postpone collecting benefits beyond your full retirement age (typically 66 or 67), you can earn an annual delayed retirement credit of 8 percent2. That’s a big bump in benefits every year up to age 70 — and that’s a huge advantage for your retirement income.

On the flip side, filing for benefits before your full retirement age can permanently reduce your monthly income. Benefits will decrease based on how early you retire. What’s worse, if you begin receiving Social Security benefits early, your surviving spouse may not be able to receive your full Social Security benefit if you pass away.

The bottom line is that there are real steps and strategies you can take today to help secure your future. It’s never too early or too late to evaluate your current retirement savings plan — or create a new one.


1 The PEW Charitable Trusts, Retirement Security Across Generations: Are Americans Prepared for Their Golden Years?  May 2013. Page 2

2 Social Security Administration, Retirement Planner: Full Retirement Age