What if i am too old to save for retirement?

There are many examples that point out the benefits of starting young when it comes to investing. I recently heard that if you saved just 3 dollars a day starting at age 25, assuming traditional market returns, you’d be a millionaire by the time you reach retirement age. Time is the great enabler when it comes to preparing for retirement.

But what if time isn’t on your side anymore? Can you be too old to save for retirement?too old to save for retirement

As I teach financial classes, I often have students that are in their 40’s, 50’s or 60’s. These kinds of examples are not so encouraging when you are in your 60’s. What then? Is it too late to start? Is there any point in even trying? It can be very discouraging.

You have more time than you think

If you are currently 60 years old, actuarial tables show you still have a life expectancy of another 25 years or more, and who knows what medical advances may happen in the next 25 years.

Remember that the average life expectancies that we see of 75-80 years include babies that die soon after birth. It includes young people who die in accidents. It includes those who die way too young of diseases like cancer. The point being, if you have made it to 60, you stand a very good chance of living well into your 90’s.

Reality is you probably have more time than you might think.

So what do you do if you are afraid you may be too old to save for retirement?

Start now

While it would have been better to start saving at a younger age, it is never too late to start saving. Some saving is better than no savings at all.

Live on less than you make

Sure it’s a basic fundamental of personal finance at any age, but living on less than you make is critical if you are entering your golden years without much in the way of savings.

Determine how much you really need

According to the US Department of Labor, fewer than half of Americans have ever calculated how much money they may need for retirement. If you find yourself nearing retirement age without much in the way of savings, it is important for you to determine how much monthly income you will really need. When will you begin collecting Social Security and how much do you expect to receive? Do you have a pension available from any of your previous employers? Do you have a hobby that brings in a little side income? Answers to these questions will help you know how much savings you really need.

Work a few more years

Just by working a few more years than you planned sometimes you can make a big difference in the amount of income you have available. If you planned to retire at 62, consider working until 65 or 67. If you planned to work until 65, consider working until 70. If your health is good, those extra years can really help.

If your current job is physically demanding or stressful, consider the skills you have learned. Think of ways you could potentially use those skills either in a less demanding way, or perhaps in a part-time role so that you could continue to earn some income to supplement your savings.

Find a quality adviser

This can be very important. If you are getting a late start you don’t have time to learn by trial and error. Find a quality financial adviser that can assist you with getting started saving and investing. Make sure you find someone who is willing to teach you. If you meet with an adviser and all they are interested in is selling you their product because “they said so” run the other direction. There are many great financial advisers but there are also many that are more interested in lining their wallet than in lining yours. There are products in this area that provide huge commissions to the sales person but really are poor choices for the investor. If your adviser is too eager to sell you something without understanding your needs and situation, it is likely they are looking to earn a big commission. Ask around with people you know to see if they know a quality adviser. If you meet with someone, ask a lot of questions. If they are unwilling or unable to answer all your questions, then move on to the next adviser. If you still have difficulty finding someone try checking out Dave Ramsey’s Endorsed Local Provider for investing in your area.

Don’t take unnecessary chances

Be careful about taking unwise risks in seeking that pot of gold. Successful investing is still all about saving consistently over a period of time. You may be tempted to follow that tip that your co-worker’s cousin’s uncle’s barber gave him about that stock that’s guaranteed to strike it big. The only thing likely guaranteed is you’ll lose your money. Skip the late night infomercials promising thousands of dollars of income for just a few hours of work. Life just doesn’t operate that way. And no there really isn’t a Nigerian banker that is just waiting to solve your financial woes.

A faithful man will be richly blessed, but one eager to get rich will not go unpunished. Proverbs 28:20

Get rich quick schemes generally only work out for the charlatan that is selling them. However, understand that when you are feeling desperate to catch up to meet your savings goals you may find yourself more susceptible to their message. Do not give in.

It is not too late

There is an old proverb that says the best day to plant an oak tree was 20 years ago. The second best day to plant an oak tree is today. It is never too late to start. Be encouraged. All of us have parts of our past that we wish we could go back and change. That’s just a part of life. As long as you are earning an income though there is always time to save.

Photo credit: Marcel Oosterwijk (creative commons)

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