When you think about retirement, you may think of living it up on a nice beach, volunteering when you want to, sleeping in, and just relaxing. However, would you believe that 45% of Americans, and 40% of baby boomers have $0 saved for retirement? If you are investing after 50, it may seem hopeless to retire well, but all is not lost. Let’s learn how you can still prepare for retirement, even your later years.
Investing After 50: How and Why to Start
This post has been written by our talented staff writer, Kimberly Studdard. It may contain affiliate links.
Sure, you’re over 50, but you can still build up a nice chunk of change in retirement! Check it out!
1) Know Where You’re At
When you are investing after 50, the most important numbers to know are:
- how much you currently have saved, and
- how much you will need to retire.
A good rule of thumb is to have 8x your yearly salary saved by the time you retire. So, if you made $40,000 in your last year of working, you’ll need $320k to retire around the same yearly income. However, this is just a rule of thumb. When investing after 50, it may not be practical to try to reach that number, but you can still assess your situation and see if you can reach a number that will allow you to live comfortably.
2) Make Decisions
Say you can’t reach 8x your yearly salary. Could you live off of a quarter or half of that? Could you live in a country that has lower costs of living? Could you sell your house and rent a smaller place? Could you retire for less? Investing after 50 means making decisions that will allow you to keep the money you’ve saved up for a longer period of time. You don’t want to run out of cash, but you also don’t want to stress yourself out with investing.
3) Start Catching Up!
After the age of 50, a person can start saving more money towards their 401k and IRA. For example, In 2017, investing after 50 meant that you could add an extra $5,500 towards your 401k and an extra $1,000 in a Roth IRA. However, remember that the new year may bring tax law changes, so check here for more information.
Investing after 50 comes with benefits, so take advantage of them!
While you’re at it,
- find ways to cut living costs,
- make sure you are working towards getting out of debt, and
- stay focused so when you’re time comes, you can retire without regret.
4) Use A Few Tools
Investing after 50 is easier than ever before in the age of technology. Using tools like Qapital, Stash, Stockpile, and even Acorns gives you the opportunity to put more money away. Sure, these apps won’t make you rich, but hey, every little bit helps! Plus, you can see where your money is going, how much you’re saving, and even watch it grow, all from a nifty little app.
5) Start Passive Income
Passive income is great for everyone, especially those investing after 50. Passive income allows you to keep making money, while not really doing too much behind the scenes, and it helps stretch your retirement further. The more money you make from passive income, the less you have to take out of your retirement fund.
Passive income can be made from just about anything!
- You can own rental properties,
- create products like ebooks that you sell on amazon, or even
- owning a small self-operating business like a car wash.
The opportunities are endless!
6) Know That It’s Okay To Work
At the end of the day, investing after 50 may mean that you delay retirement for a bit, or that you still have to work for a few years into retirement. Just know that it’s okay to do that. There is nothing wrong with working after retirement.
- You can lower your hours at work and work part-time.
- You can get a job that has lower responsibilities.
Whatever works for you. Even if you have to work after retirement, there are still quite a few benefits that come with it!
7) Realize That You Have To Focus On You
If you are paying for every one else to live, but not saving up for your retirement, it’s time to stop.
If you are taking care of your grown children, funding college educations for your grandchildren, or working hard to help others that aren’t going to take care of you in retirement, stop! They can figure out their lives on their own. Your life is yours, and you should be preparing yourself for retirement without worrying about everyone else. Your kids, grandkids, or friends may not help you when you need them too, so your sole focus should be on you.
Investing after 50 and preparing for retirement may seem like an impossible task, but it really isn’t. You can still prepare and have a wonderful retirement. The most important thing to remember is to just start.
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.