Can you really build a comfortable retirement portfolio at any age much less after the age of 50? Yes, you can. Many people seem to put off retirement planning until they reach middle age. I think reality finally starts to set in during your 40s and people began to realize they have to plan for retirement if they ever plan to retire. Believe it or not one day will be retirement day.
Often when I talk with people concerning their retirement, they tell me they don’t really have a retirement plan. That is not something I like to hear because I know they are going to be in for a rude awakening unless they begin preparing and planning for retirement now.
How do you get started with retirement planning if you are in your 50s or older? First, don’t wait any longer. Sit down and realistically calculate what you feel you will need or want to have in retirement. Next, consider contributing 15% of your annual income, if possible. If not, contribute as much as you can at first and then increase it with each raise you receive. Instead of absorbing the raise into your budget, dedicate that amount to retirement contributions. Companies will often match from 3 to 6% of your annual contribution. The matching funds can help you gain momentum with your retirement saving.
Next, meet with a Certified Financial Planner that can help you consider all your retirement options. These professionals can offer advice you may not have even considered as being options that are available to you. Be prepared to answer questions about how much you anticipate your expenses will be during retirement, what age you plan to retire, what additional retirement plans and benefits will you have for retirement, etc.
A great tool to use for estimating your social security benefits is found at https://www.socialsecurity.gov/OACT/quickcalc/index.html?__utma=176294311.231916975.1422388271.1422388271.1422388271.1&__utmb=176294322.214.171.1242388408292&__utmc=176294311&__utmx=-&__utmz=176294311.1422388271.1.1.utmcsr=investorplace.com|utmccn=%28referral%29|utmcmd=referral|utmcct=/wp-admin/post.php&__utmv=-&__utmk=213336532. Fill in the questions and the calculator will estimate your retirement benefits as well as your disability/survivor benefits. It takes less than a minute to complete and will give you a good idea of what you can expect for future retirement benefits.
The 2016 annual limit on contributions to a 401K plan is $18,000 per person. For individuals age 50 and over there is a catch-up contribution allowed of $6,000 per person over the $18,000 contribution (https://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics-Catch-Up-Contributions). This allows individuals and couples over age 50 to contribute up to $24,000 per year per person to a retirement plan.
For more information on the different types of retirement plans available, go to the IRS website found at https://www.irs.gov/Retirement-Plans/Plan-Sponsor/Types-of-Retirement-Plans-1.
While retirement may seem a long way off it is imperative that you begin planning for it as soon as possible. Remember that time is on your side so don’t pass up the opportunity to get those retirement plans implemented. Keep in mind that not planning for retirement is a bad decision you will someday regret. Work on creating the best retirement plan for your situation so that you can enjoy retirement!