The most effective
way to prepare for retirement is by starting early.
This allows a person to accumulate a sizeable chunk
of savings over a gradual period of time and it also
allows the balance to be fully effected by the power
of compound interest. However, in the real world this
often does not happen. For many people retirement seems
like something too far off to think about when they
are young. They prefer to spend their time and resources
on items and activities that seem more relevant
to their current stage of life. And then one day
they realize that retirement is right around the corner
and they are utterly unprepared. If this describes
your current situation then don. t despair!
There are still things that can be done to affectively
prepare for retirement in the event that you are
starting late.
Tips for Late
Starters
- Start
Immediately. Some people become so overwhelmed by the
reality of their situation that they react by avoiding
it or delaying action. This, however, simply worsens
the problem. The quicker an individual begins to act
the better off he will be.
- Create a
budget. Reduce or cut spending in unessential areas.
It is critical for people to discipline themselves in
upholding their established limits.
- Take
advantage of 401K employer matches. If a company
offers a 401k, it is wise to fully fund any amount
that is matched. Supplement this investment by opening
up a Roth IRA. If there is money left over after the
Roth has been fully funded ($3000 annually) then place
the remaining funds into the 401K.(above and beyond
the matched limit).
- Consider changing jobs. It is important
for . Late Starters. to place as much into
their savings program as they possibly can in order to
make up for lost time. Aside from cutting back on
unnecessary spending, another alternative is to
consider finding a new job that provides more
money.
- Automatic deposits. Apply to have
a portion of your paycheck automatically deposited
into an account. This prevents the temptation for an
individual to spend the money.
- Work longer.
For some people it is necessary to reside themselves
to the fact that they will have to work for a couple
of extra years. This just might provide the extra
funds that are needed to provide a comfortable
retirement. Other people may want to consider finding
a part time job during their retirement years.
Saving for retirement
at an early age is definitely the easiest way to
go. However, don. t despair if this is no longer
possible. Immediate action along with some hard work can
provide the necessary funds for individuals who have
gotten late starts on their retirement
savings.
