Little Or Nothing Saved At 50 You ve Got To Act Fast. Here s My Simple Catch-Up Plan.
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Facing 50 With Little Saved? Act Quickly?"Here's a Simple Catch-Up Plan
Summary:
Turning 50 and just starting your retirement planning journey? It's a common concern, especially among those who are self-employed and have prioritized investing in their businesses over personal savings. But don't worry?"it's better late than never. Here's a straightforward plan to catch up.
The Common Dilemma:
Many self-employed individuals breach the golden rule of "paying yourself first" and find themselves with minimal retirement savings. Research from the Employee Benefits Research Institute shows over half of self-employed people aged 45-54 have under $50,000 saved. Additionally, a Fidelity study highlights that boomers are on track to replace only 60% of their current income in retirement, even with Social Security and pensions.
The Unprepared Generation:
Why are we so behind? As baby boomers, we often spent rather than saved, facing pressures like college fees, supporting aging parents, and escalating housing and medical costs. Historically, our generation has struggled with self-denial.
Steps to Catch Up:
- Maximize Retirement Contributions: At 50, you're likely in your peak earning years. Dedicating even a 3% annual raise to a retirement plan can add up. For example, a $75,000 salary with such a raise means an extra $2,250 a year. Saving an additional $10 daily in an IRA or 401K could grow your savings by over $100,000 in 15 years at an 8% annual return.
- Use Catch-Up Provisions: The IRS allows those over 50 to increase contributions to retirement accounts. This can raise your 401K contributions to $20,000 annually. Opt for the immediate tax break of a deductible IRA over a Roth if you’re behind, as your tax bracket will likely be lower in retirement.
- Revise Spending Habits: Often, lack of savings stems from overspending. The silver lining? There’s ample room for improvement. Start by creating or revising your budget to align with new goals. Categorize expenses and address wasteful habits developed over time.
- Take Immediate Action: Save more, consider downsizing, and rethink your retirement age. Tackling these challenges head-on will not only secure your future but also alleviate anxiety, offering newfound hope.
Conclusion:
By taking decisive steps now, you can improve your retirement outlook significantly. Start today, and feel empowered by addressing these challenges directly.
About the Author:
Carl Hampton is a bestselling author known for "From Credit Despair to Credit Millionaire." Have a question or need advice? Reach out at [CarlHampton.com](http://www.CarlHampton.com).
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