In your 50s and realize you haven’t saved enough for retirement? What do you do?

. 2 min read

If you are in your early 50’s and come to the realization you have not saved enough for retirement, not all hope is lost. You have several options to increase your savings and be ready for retirement:

1. Pay off your mortgage or move (downsizing)

One of your biggest expense is probably your housing. Paying off your mortgage or downsizing your home can free up cash that can be invested for your retirement. For example, let’s say you have a $1000 mortgage, which is $12,000 in annual payments or $15,000 in real income. If you invest in the $15,000 in a tax-deferred account, that is about $340,000 over the next 15 years (at a 5% rate of return). Not too bad.

2. Take advantage of catch-up contributions

You should maximize your tax-deferred savings (401(k), IRA, Roth IRA), and if you’re over 50, you can sock even more away. In 2018, if you’re 50 or older, you can put $24,500 in your 401(k) and $6,500 in an IRA. Also, don’t be too conservative on your investments since come additional risk might be needed to increase your retirement funds. Consider 50–50 stocks and bonds, or even a higher percentage in stocks. However, be sure to speak with a financial advisor before proceeding.

3. Reduce your investment fees

Do you know how much you’re paying in investment fees? Do you know the expense ratio on each of your mutual funds (or what an expense ratio is)? Both financial advisors and the funds they invest in often charge fees, and these fees can add up. If you have a $250,000 invested, and both your advisor and funds are charging 1%, you’re paying $5,000 a year in fees ($2500 to the advisor and $2500 to the funds). That $5,000 a year invested over 15 year could be an additional $113,000 in your retirement account (at a 5% rate of return). Consider going for fee-based advisors or low-cost index funds (often having expense ratios of less than 0.20%) to increase your retirement funds.


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