Hello and welcome to the Online Community! For this segment, we are turning to you – our own community – to crowdsource your tips, suggestions and practical advice on what has successfully helped you save for retirement.
In a recent article, Time-Honored Financial Advice With a Twist, AARP offers some guidelines to boost savings for emergencies and retirement. Have you followed any of these guidelines? What steps are you taking to secure your financial future? How do you make the most of your money? And, how do you save for retirement? We’d like to hear from you!
I wish I had done these things consistently from the beginning, but in my 30s, I didn't see the need.
Because of poor investing choices between several jobs I held, along with the effects of two divorces, I managed to have about $2,500 in tax-deferred savings by the time I was 55 and starting a new job after several years of roller coaster employment and layoffs.
Even before I qualified for the match on 401(k) with the new company, I started my 401(k) plan and had the new company start taking out 10 percent. I hardly missed it as I continued to pay my bills and pay extra on my debts. After I'd been with the company for 6 months, they started matching 50 percent of the first 6 percent of my contribution. That was pretty much my entire growth in the plan. Their investment options weren't all that great for growth, but at least I didn't seem to lose much if any principal in my account.
As I got raises, I increased my contribution until I was putting in 25 percent of my paycheck. By the time I was reduced in force 7 years after they hired me, I had amassed a fortune of about $135,000 in my 401(k) plan.
One thing I would have done differently in looking back: I would have taken Suze Orman's advice and I would have opened and maximized my contribution to an IRA and would have invested the IRA holdings in ETFs. I would have continued to put the rest of that 25 percent, or more, into the 401(k) plan.
When I was reduced in force and decided to retire, I rolled over my 401(k) plan into an IRA with Vanguard as soon as I could to get half a chance at growing my meager retirement nest egg. I knew the 401(k) plan wouldn't get me there.
In these years since leaving that company, I have not touched my IRA. Between reinvested dividends and market growth, it has grown several times over.
I also invested in me by paying off all my debts, except our small mortgage, by the time my severance ran out.
I have planned better than some and I have had better luck than some. One of my best pieces of luck came with that final job - the second longest job I had held in my career.
I might stand a chance at affording my future.
As AARP and others have pointed out, even if you are in your 50s, it is not generally too late for you to start your retirement plan, but it won't build itself.
Make your plan and do it! Revise the plan as needed.
I used my employer's 401K plan and put in the maximum allowed every year. Before they had a 401K, I bought a savings bond every month (at the time I could have the money deducted from my check and the bond bought and mailed to me). Every little bit saved makes a retirement more enjoyable.
Maximize your 401K (or similar) contribution, if one is available .. especially if your employer has a matching program. Out of sight, out of mind; if you set up autowithdrawl from a paycheck, you'll get used to the reduced amount, and will be growing your nest egg.
I'm a 'downer' on this subject. The only way to save enough for retirement was to start saving/investing by your 30's. It's the principle of 'wealth accumulation'. There is no way to save enough for retirement if you're starting from nothing and already in your 50's. Interest rates are low, and the closer one gets to retirement, the more dangerous it is to invest in stocks.
There is no 'quick fix'.
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