The wisdom of saving for retirement is never questioned.
Yet, so many people wait too long to make meaningful contributions in to their retirement savings plan, if they have a plan at all.
By age 50, however, individuals must have a clear path forward as they begin to take concrete steps into retirement life.
Becoming more aggressive about saving and reducing debt are the highest priorities, especially as more retirees face new economic hurdles.
If you feel like so many others, here are some ideas that can help you regain your financial footing as you near this incredible life milestone.
Individuals who contribute the most to their 401(k)s tend to spend less on housing and transportation costs.
These lifestyle choices of where to live and what to drive may be the reason why some cannot sufficiently save for retirement despite an excellent salary.
As people reach their top earning potential between the ages of 45-50, they may fall into a trap of over-investing in housing or other huge purchases.
Professionals nearing this age will still get pay increases, but not as large as before. During this phase, you may want to take a hard look at these big-ticket costs and evaluate the long-term financial benefits.
Did you know that the IRS tax code leaves wiggle room for catch-up contributions?
If you’re behind, the obvious mechanism to get back on track is depositing maximum annual contributions into your workplace retirement account and a traditional Roth IRA.
It’ll take some sacrificing, but at least it’ll pay off.
Debt and expenses
Paying off all outstanding debt will work wonders for your retirement plan.
Retirement is boiled down to identifying expenses that aren’t going anywhere despite being on a set income.
By reducing and eliminating debt now, you give yourself more control as expenses turn into greater savings for the nest egg.
Home equity conversion mortgage
Retirees over the age of 62 can leverage a home equity conversion mortgage to increase their financial resources.
The program eliminates monthly mortgage payments, allowing retirees to boost their retirement income.
Additionally, retirees retain the option to sell the home or pass remaining equity onto heirs.
*(1) at the conclusion of a reverse mortgage, the borrower must repay the loan and may have to sell the home or repay the loan from other proceeds; (2) charges will be assessed with the loan, including an origination fee, closing costs, mortgage insurance premiums and servicing fees; (3) the loan balance grows over time and interest is charged on the outstanding balance; (4) the borrower remains responsible for property taxes, hazard insurance and home maintenance, and failure to pay these amounts may result in the loss of the home; and (5) interest on a reverse mortgage is not tax deductible until the borrower makes partial or full repayment. This material is not from HUD or FHA and has not been approved by HUD or any government agency.