Started Saving for Retirement Late? There’s Still Hope

Approximately half of working American households don’t have enough to retire. That’s a scary statistic when you think about it, especially given concerns about Social Security’s solvency.

However, even if you start late, all is not lost. You can still catch up, whether you start at 25 or 40. You will need a concrete plan on how to achieve your retirement goal. It’s important to be prepared to put away even more the later you start. That could mean tightening the purse strings or taking extra steps to boost your finances.

If this sounds like you, let’s take a closer look at what’s in store, and what you’ll need to do to hit $1 million.

How Much Do You Need to Retire?

While this is a very subjective question, you can do a ballpark of how much you’ll need to retire. It will largely depend on your financial needs when you quit working. Generally speaking, you’ll want to outright own your home when you retire so you have no mortgage. Of course, life doesn’t always work out that way.

You’ll need to consider the lifestyle you wish to have and at what age you plan to call it quits. If you plan to live simply and downsize, you’ll need less. However, if you want to live more lavishly, you’ll need more.

In Your Twenties

It’s best to start saving up when fresh out of college, trade school, or just entering the workforce. The younger, the better.

For example, if you start when you’re 25, you could get away with investing as little as $214 per month if you’re earning an annual rate of return of 9%. That figure will go up the lower your saving rate.

In Your Thirties

When you get into your thirties, however, now is the time to really crunch down. And the minimum savings at a 9% savings rate is now $340 per month at 30 and $546 at 35. That’s $126 and $332 more per month, respectively.

Of course, if your annual rate is lower, you’ll have to put away up to $880 or $1,202 per month, depending on whether you’re 30 or 35.

In Your Forties

Once you hit 40, the crunch is on. You’re approximately 25 to 27 years from retirement at this milestone. The amount you’ll need to sock away also jumps significantly.

At age 40, you can expect to have to contribute at least $892 to $1,679 per month toward your retirement plan.

If you’re not sure how to get started, it’s a good idea to speak with a financial planning expert who can help ensure you reach your goals so you can enjoy your retirement years instead of fretting them away.