You are in a position right now where you simply did not plan in advance soon enough. You want to retire, and soon, but you do not have the money in the bank to do so. If you have waited until the last minute to plan for retirement, there is good news. There are options that can help you, but you will need to take steps to plan now.
Waiting until the last minute is a big risk for several reasons. The biggest reason is that there is little time to take advantage of compounding interest. In other words, you cannot count on interest to boost your retirement income. However, there are other solutions to consider.
- Get money into savings. Savings is the best route to building your fortune at this point. You do not want to take on any type of risky investment because it will be hard for you actually to build enough wealth in the process. In other words, you cannot overcome a downturn in a risky investment at this point, so save money instead.
- Tap out your IRA or Roth IRA every year to the highest level that you can. If you are over the age of 50, you do have the ability to add an extra $1000 into these accounts each year, for a total investment amount of $6000 annually. Watch for these numbers to change, too.
- If you have a 401k, you have an added benefit of being able to put away an extra $5000 a year into these accounts if you are over the age of 50. However, contribution limits will change yearly so do check to find out what the current year’s contribution level is before putting too much into these accounts.
Talk to your financial planner about your decision to retire. The key may be to find new ways to save that work for your situation, or investments that are better for you.
Another option to consider is a delay of your retirement. While this may or may not be the route you take, it is an option in situations where you do not have a long time until retirement. If you do delay your retirement, you may be able to take on more risky investments, which could inevitably help you to build your wealth faster. However, going back to work may not be what you want to do. In all cases, it is a good idea to determine how much money you will need to have in your retirement accounts prior to making the decision to retire. Estimate your costs after retirement to determine if you should wait or if you have enough to retire.
At the last minute, it can be hard to build enough wealth to retire on. However, there are options for most people. The key is to take advantage of any time that you do have to build wealth so that you can, ultimately achieve more in the long term. Retiring a little later may be necessary in some cases.
George Gallagher is a personal finance writer. He is currently working with parents to find Nevada student loans for their children.