Between all the financial obligations and other responsibilities in your life, you may have brushed building your nest egg to the side. If you’re wondering how to catch up on retirement savings later in life, you’re not alone – according to the latest Retirement Confidence Survey by EBRI, less than half of Americans have invested $25,000 for retirement.
That doesn’t mean you can’t take steps now to still reach your retirement goals.
Here are some focal points on how to catch up on retirement savings:
Say “no” to lifestyle creep
“Lifestyle creep” refers to our tendency to increase our spending levels as our income goes up. Especially in your later years, your earnings have most likely increased and you may be subject to this financial mistake.
If you’re wondering how to catch up on your retirement savings, this might be the roadblock holding you back. Creating a nest egg later on is achievable, but you’re going to have to put away and invest more than you did while procrastinating.
Although you’re a late bloomer when it comes to retirement, your wealth likely has years to still grow and compound for retirement. Consider working with a trusted financial advisor to create a retirement roadmap, which can illustrate how much you’ll need to put away. You may even be able to reach your goals with your current budget by simply starting to invest more.
Take advantage of tax-advantaged investing
Don’t discount the value that tax-advantaged investments (such as a 401k) can bring to your retirement. These investment vehicles can allow your wealth to grow and compound tax-free, and you can either invest or withdraw them without tax. With a Roth IRA, for instance, your investments are initially taxed, and then they can grow and be withdrawn tax-free in your golden years.
Stick with a prudent long-term plan
If you’re pondering how to catch up on retirement savings, you might be tempted to chase greater returns by making concentrated bets in the stock market. When seeing the meteoric rise of certain “hot” stocks, this might seem like an appealing option to quickly assemble your nest egg.
While the possibility of higher returns seems tempting, you might be overlooking the potential downsides. Concentrating your wealth can greatly increase your risk, and if that investment fails, you’ll be subject to severe disappointment. It’s important to note that no one (and especially not “experts” in the media) can be certain how an investment will perform in the future.
Learn more about how to catch up on retirement savings
We recognize that everyone’s financial life is unique and can come with its own set of financial challenges. We can craft a bespoke investment plan to show you how to catch up on your retirement savings, based on your specific needs and goals. To learn more, start a conversation with LexION Capital today.