Here are the simple steps to fix your finances and boost your retirement if you’re starting late.
Full Transcript:
BOB POWELL: I think the smartest thing that you can do is to sort of examine your budget. What are your essential expenses? What are your discretionary expenses? And think about it this way 50% of your money should be going toward essential. 30% could be going toward discretionary expenses and 20% toward savings and debt payments. So if you’re not using that 50, 30, 20 rule, you might adopt that and say, I need to cut back on my discretionary expenses. Maybe there’s some essential expenses I can cut back on. But whatever you do, if you’re behind the eight ball, start saving now and you know you won’t be able to take advantage as some 20-year-olds will be of the of the benefits of compounding. But you can still catch up and that’s the important thing is don’t think that all hope is lost. The other thing that you should think about, too, is once you hit age 50, you can take advantage of the catch up contribution. So if you’re participating in a 401(k) or you have an IRA, you can make additional contributions once you hit age 50. So I would start doing that.
The important thing to do is it’s is to think about it this way. Saving is important. But if you’re behind the eight ball, the other thing that’s sort of equally, if not more important is actually working longer. In fact, if you were to work two years longer than what your anticipated date of retirement is, that will go a long way toward helping you improve your retirement security. So if you were planning on retiring at 62, consider making it 64. If you were thinking about 65, make it 67. And that’s sort of like in addition to saving more, working longer are the two big things that you can do to sort of improve the odds of you retiring to a standard of living that you want.
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