You’re Over 50 and Haven’t Saved? Is There Still Time?

You have heard your entire life that you need to save more for retirement. Your intentions were good in following this advice. However, several life events caused you to draw down on those savings, and you feel you may not have enough for retirement. You are in your 50s now, and it seems that you’ll never make enough to live comfortably during your retirement years.

While it’s true that you won’t get the savings benefit of a 20-year old, you can take steps to improve your position. You have several working years ahead. You’ll need to adjust your budget and your mindset.

Create a Financial Plan

The standard retirement age of 65 is not too far away for fifty-something people. You may be tempted to skip a financial plan because you believe it won’t make a difference. But, it will. You should treat your retirement plan as a roadmap.

Part of your plan should include a budget. List all your expenses and cash coming in. Then, find out where you can cut on costs. You should try to maximize the cash inflows which gives you a one-two punch that can help towards saving.

You should not factor in Social Security into your plan. Try to project your living expenses without this benefit. If your plan includes living without this money, when you start collecting, it will be a bonus.

Eliminate Your Debt

This article isn’t about debt. But, any discussion regarding savings must mention eliminating this burden from your life. You’ll find plenty of advice online to help you implement this into your overall plan. When you get out of debt, you’ll find your savings will pile up quickly.

Learn How to Invest

People over the age of 50 don’t have the luxury to recover from bad investments. You could choose a financial adviser to help, but if this person turns out to be incompetent, you’ll be worse off than when you started. Learn how to invest. There are many resources online that can help you with the fundamentals of investments. Steer clear of techniques that promise instant returns. Focus on techniques that advocate a longer time horizon.

Passively-Managed Investing

One way to circumvent learning investing is to set up an automated monthly contribution into an S&P index fund. It’s difficult for most people to beat the performance of the S&P 500. Over the long run, this is true for money managers as well. Stocks are mean-reverting. Some stocks may perform exceptionally in the short term, but most will follow the index over a more extended period.

Income Diversification

Investing in stocks is not without its problems. You can refer to the financial crisis of 2008 and beyond. Someone in their 20s and 30s can recover from this economic tsunami. People over 50 cannot. Therefore, you should diversify your income stream to help navigate any future calamities.

One of the fastest ways to grow your wealth and diversify your investments is to become a landlord. You’ll hear many financial gurus state that stocks have outperformed real estate and they’ll present charts to fortify their case. However, these arguments do not account for rental unit income. When you factor this income, real estate will be the clear winner.

The income from properties is a great way to earn passive income. But, be careful not to overextend. Real estate moguls offer advice to use your current properties as collateral for future deals. If you use this technique with too many deals, they can unravel if something goes wrong. Leverage works well when it goes in your favor. It can destroy your wealth if it doesn’t.

Forget the Hail Mary Pass

Football fans will recognize the reference to the phrase Hail Mary pass. When a team is down, and there isn’t much time left in the game, that team will try to throw a long pass to score enough points to tie or even win. This technique fails more than it works in football.

After you build up savings during your 50s, you may be tempted to boost your income and make up for the lost time. You place a good chunk of this new savings into riskier investments. Like the Hail Mary pass in football, you believe the payoff will be huge if it works. The downside is you’ll lose most of this new savings if it doesn’t. You now have even less time to make up for it.

Other Considerations

When you are over 50 and have little money saved for retirement, you’ll want to maximize your earning potential. It’s likely you’ll need to work longer than if you had saved when you were younger. You may want to continue working even after you declared yourself retired. If your property taxes are high, you should consider downsizing or move to a tax-friendly state. Several states do not levy state taxes. The property taxes may be lower as well.

All is not lost if you are over 50 and haven’t saved as you can grow your money. It takes discipline, dedication, and sacrifice. The rewards will be well worth the effort.

About James Cochrane

James is a writer in the financial, marketing, and technology sectors. Before switching to writing, he was a computer programmer for several years. Feel free to connect with James on Facebook and LinkedIn