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Older and Don’t Have a Retirement Plan - DO THIS!

What do you do when you’re nearing retirement, but don't have a retirement plan in place? This is a question we get all the time. It’s a scary prospect, and a lot of older people are in this situation.

So today, I'm going to cover everything that you need to do to prepare for your retirement when you’re in your 40s, 50s, or 60s (or even older!) and haven’t saved anything (or barely anything!) for retirement. Following these tips will help you feel more secure as you approach those golden years.

1. How Much Do You Need To Retire?

This is the first question you need to answer. It’s the starting point because you need this number to figure out how much you need in investments before you can retire. Just remember: you don’t need an exact number, you just need the closest estimate. You can always modify this number later on. Just begin with your closest estimate.

Here’s how you figure it out: First, pull up your budget and look at your expenses. Then, determine how those expenses will change in retirement. Once you do that, create a “retirement budget.” Do this by working with your existing budget or download our free budget to work with. The idea is to estimate your annual expenses in retirement. Once you get that number (your annual expenses in retirement), calculate it by twenty-five. This is the amount of money you’ll need to reach financial independence and to retire.

2. Start Contributing To Your Retirement Accounts

It’s time to start contributing to retirement accounts. Look into all of your options: a 401(k), Traditional IRA, Roth IRA, HSA . . . the list goes on. Figure out the tax-advantaged retirement accounts available to you and start pouring money into them.

And remember: When you’re dealing with retirement accounts when you’re older, age is actually an advantage for you. If you’re over 50, you can contribute more to certain retirement accounts - and this is great because these accounts aren’t taxed, meaning you reduce your taxable income significantly.

3. Consider Target-Date Funds

If you’re concerned about investing and have held off from investing in the stock market because of your fear of losing all your money, consider target-date funds. But, full disclosure: target-date funds come at a cost. They typically involve more costs than the old do-it-yourself method. In fact, Amon and I don’t own any target-date funds because of this.

BUT, investing in target-date funds is better than not investing at all. These funds are typically designed to reduce the volatility in the market and they use specific dates to figure out if you should be investing more in bonds or equities.

Target-date funds are typically simple and easy to invest in because they allocate investments based on your age and expected time of retirement. They also do frequent rebalancing for you, so you don’t have to worry if you’re not comfortable with rebalancing on your own in a general index fund. Again, if you’re choosing between not investing or investing in a target date fund, you should seriously consider target-date funds. Even better, if you feel comfortable investing on your own, you can create your own stock and bond index fund portfolio to reduce fees. Either way, the goal is to begin investing according to your risk tolerance.

4. What Retirement Income Are You Entitled To?

When we talk about retirement income, we’re talking about your social security and pension. Go to the Social Security Administration's website and get a copy of your Social Security Statement. This will show you how much you can expect to receive at different ages.

You can start collecting Social Security at 62 at a reduced rate and start collecting 100% of it at 66 or 67. But at 70, you can collect more than 100%!

When it comes to your pension, you may be entitled to pensions from your current job or your previous ones. Do some research and find out what you’re entitled to.

5. Start Making Sacrifices

Let’s face it. Sacrificing isn’t fun. But, it could make the difference between retiring comfortably and not retiring at all.

Let’s talk about cutting costs. You need to do it. Go through your budget, line by line, and find out where you can save so that you can use that saved money to invest more.

And when you’re going through your budget, focus on everything - the big expenses and the small expenses. Everything adds up!

Here’s an example with housing. Housing usually accounts for a whopping 30% of the average person's expenses. Here are a few ways you can reduce your housing costs:

  • Downsizing: If you live in a house that’s bigger than what you need, consider swapping it out with a smaller property. Whether you rent or own, you’ll save money.

  • Move somewhere with a lower cost of living: this is common in cities with a variety of suburbs and neighborhoods, and a simple way of saving more for retirement.

  • Airbnb: If you own your home, you can consider renting it out through Airbnb. Rent out the extra rooms and use that extra money to invest.

6. Avoid Additional Debt

I’m not just talking about car loans and home loans! Think . . . student loans!

A lot of parents in America take on student loan debt for their children. And I get this is going to be a touchy subject because Amon and I are parents too and we understand that you feel an obligation to give your kids the best start that you can.

But I’ve seen so many parents sacrifice their retirement to take on student loan debt for their children. And I think if you are an older parent who doesn’t have a secure retirement plan in place, you may want to reconsider.

Remember: You can’t borrow or get a loan for your retirement, but your children can for their education. When you shoulder the brunt of their loans, you’re pushing your retirement back. And you only have a limited time to do that. On the other hand, your kids have their whole lives (or, presumably, much longer than you do) to pay off student debt.

I know this sounds harsh, and I’m not saying you should never pay for your child's education. I’m simply advising that you consider whether to take on massive amounts of student debt for your children if you don’t have a solid retirement plan. Without a solid retirement plan, you simply can’t afford huge amounts of debt.

7. Start A Side-Hustle

Get your money-making-mindset right! Try to invest at least ten hours a week into something you really enjoy that also can make you money - because your passions are the best things to channel into side income. A good side hustle that you enjoy doing can also be carried into retirement if it isn't too labor or time-intensive, and can supplement your retirement costs.

8. Stay Positive

Many people who don’t have a retirement plan are pessimistic because they feel like they’re in a hopeless situation. But this isn’t true! Life is long, and many of us live to be as old as 80, 90, and even 100!

This advice I’ve shared for retirement planning can be carried out over just 10 years. If you’re 50, you can have a secure retirement in place by the time you’re just 60. Remain hopeful about your situation because financial independence is possible . . . even when you’re starting late!

We Retired Early to Portugal - Renovating Our Dream Villa (Q&A + See Our 2nd Kitchen Renovation)


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Hello, We’re Amon & Christina

We’re former federal government employees that focused on saving, making, and investing money so that we could grow enough wealth in our investments to never have to work again.

And, guess what? We did it! At the age of 39, we reached financial independence, quit our jobs, and . . . we retired!

So, if you’re interested in learning how to save, make and invest money on the road to financial independence and retiring early (i.e., F.I.R.E.) - this site is for you!

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Our comprehensive course on reaching financial independence and retiring early.

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Everything you need to know about investing in the stock market for financial independence & retiring early (F.I.R.E.)

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A Step-By-Step Course to Relocating and Living in Portugal. 

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