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Any advice for someone starting saving for retirement VERY late?
Old 01-27-2023, 01:10 PM   #1
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Any advice for someone starting saving for retirement VERY late?

51, never married, no kids.

I never saved much for retirement and what I did save was swindled away from me by my ex-fiance (who also left me drowning in credit card debt, which I discharged via bankruptcy).

I have a new IRA via my employer, I am doing 5% right now and they match up to 3%. I don't have a lot of extra money to invest / save (maybe $250 a month). I welcome any advice you might be able to offer to help me catch up!

And I appreciate everyone's kindness in not pointing out what I already know: that I should have started MUCH earlier, and that what I do have to work with, isn't very much.

xoxo,
L.
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Old 01-27-2023, 01:16 PM   #2
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Old 01-27-2023, 01:58 PM   #3
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Itís NOT too late! Learn the lingoÖ.I suspect your employer plan is a 401k, 401a, or 403b, not an IRA. 5% is ok to get you started, but save till it hurts to get that % up. Learn the rules of your plan. Post your planís investment choices here for more help. The more you share, the more help youíll get. Best Wishes.
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Old 01-27-2023, 02:02 PM   #4
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Old 01-27-2023, 02:06 PM   #5
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OP, Social Security is some of the best retirement income available, as it is inflation protected and, despite the common media hysteria, more reliable than any other source. One cornerstone of your plan might be simply figuring out how to support yourself until age 70, when maximum SS kicks in. Good luck.
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Old 01-27-2023, 02:13 PM   #6
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There is a well-known economist named Larry Kotlikoff who has a product called ESPlanner. The program is kind of a monster, probably well beyond anything you want to tackle, but I think that his philosoply is worthwhile pondering. Basically, he suggests that one's financial goal should be a fairly level spend rate both before and after retirement. Obviously this means that one must save prior to retirement in order to have savings to replace salary income. Looked at another way, it is suffering pain now in order to reduce pain later.

So in that context, is the 5% plus $3K/year "extra money" plan enough (with SS) to make you happy in retirement? My guess is no, in which case I suggest that you revisit your assumptions and look for ways to live further below your means and save more in the employer plan and in your own accounts. Pain now, reduced pain later.
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Old 01-27-2023, 02:13 PM   #7
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No matter your age:

In order:
Establish a 6 months emergency Fund
Clear any/all debt besides a mortgage
Increase the 401k to the annual cap
Then...
Start taxable investment savings
Invest any bonus, extra income
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Old 01-27-2023, 02:17 PM   #8
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Despite your ER moniker, perhaps you would like to join us on Feb19th in Sarasota for a ER get together lunch around 2pm.
It is a really nice get together on a yearly basis. You would receive lots of good advice in person, which will probably get you more comfortable going forward.
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Old 01-27-2023, 02:20 PM   #9
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Originally Posted by Aerides View Post
No matter your age:

In order:
Establish a 6 months emergency Fund
Clear any/all debt besides a mortgage
Increase the 401k to the annual cap
Then...
Start taxable investment savings
Invest any bonus, extra income
+1. And LBYM.
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Old 01-27-2023, 03:02 PM   #10
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Originally Posted by Aerides View Post
In order:
1-Establish a 6 months emergency Fund
2-Clear any/all debt besides a mortgage
3-Increase the 401k to the annual cap
Then...
Start taxable investment savings
Invest any bonus, extra income
OP, depending on your financial situation, if you can just get the top 2 in the above list done in a year or two (if not already there), that would be huge.
Once you got those 2 done, move to the 3rd (increase 401k to the annual cap) if possible.
Assuming you will work until 67 or so, you will still have ~15 years to invest. Things will move very slowly at the beginning, but once you have some good amount of $ invested, your net worth will increase much faster.
So the key is to start now focusing on 1 and 2...
Even if you can never get to 3 and beyond, just having 1 and 2 done will change your life (moving toward much more positive direction). Being debt free and having some emergency fund will bring stability to your life, and you will enjoy a much low stress life style. Good luck.
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Old 01-27-2023, 03:20 PM   #11
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When I realized I was behind saving for retirement, I worked a second job to save more. It was a great kickstart to my savings.
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Old 01-27-2023, 05:29 PM   #12
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Welcome msincogneato -

The advice given is good, but not easy to accomplish. Agree completely with Aerides that the very first step is to pay off any credit card debt and other personal debt and to establish a decent emergency fund.

But lets talk about the elephant in the room. You say you can't do much more than 5% into your 401k.... So you'll have to figure out how to improve that.

The hard part is to cut your spending so you CAN save/invest. It will not be easy. Go for the low hanging fruit first... the obvious stuff like starbucks vs homemade coffee, cut down on meals out and cook at home... bring in lunch from home. The next low hanging fruit is every recurring expense... Cell phone carriers - there are a lot of good deals on plans that have unlimited talk/text/data for $30/month... If you're paying more, change carrier. Cable - cut the cord. If you have a boatload of streaming services, look at reducing to one or tow. Car/home insurance, shop price every renewal. When I got serious about cutting expenses I was able to cut a few hundred per month with very little effort... that money was then redeployed to debt reduction and savings.

There are some people on the forum who got here through hefty salaries, but lots of others who got here through being frugal. You'll need less money to support retirement if you learn to live on less money.

If you have credit card debt look at doing snowball payments... Have a fixed amount you allocate to retiring the debt. Pay the extra on the highest interest payment card till it's paid off, then reallocate that extra money to the next highest card... until they are all paid off and you pay them in full each month.

You've got this. But it will take discipline. Welcome to the forum!!!
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Old 01-27-2023, 06:03 PM   #13
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Originally Posted by rodi View Post
Welcome msincogneato -

The advice given is good, but not easy to accomplish. Agree completely with Aerides that the very first step is to pay off any credit card debt and other personal debt and to establish a decent emergency fund.

But lets talk about the elephant in the room. You say you can't do much more than 5% into your 401k.... So you'll have to figure out how to improve that.

The hard part is to cut your spending so you CAN save/invest. It will not be easy. Go for the low hanging fruit first... the obvious stuff like starbucks vs homemade coffee, cut down on meals out and cook at home... bring in lunch from home. The next low hanging fruit is every recurring expense... Cell phone carriers - there are a lot of good deals on plans that have unlimited talk/text/data for $30/month... If you're paying more, change carrier. Cable - cut the cord. If you have a boatload of streaming services, look at reducing to one or tow. Car/home insurance, shop price every renewal. When I got serious about cutting expenses I was able to cut a few hundred per month with very little effort... that money was then redeployed to debt reduction and savings.

There are some people on the forum who got here through hefty salaries, but lots of others who got here through being frugal. You'll need less money to support retirement if you learn to live on less money.

If you have credit card debt look at doing snowball payments... Have a fixed amount you allocate to retiring the debt. Pay the extra on the highest interest payment card till it's paid off, then reallocate that extra money to the next highest card... until they are all paid off and you pay them in full each month.

You've got this. But it will take discipline. Welcome to the forum!!!
This is some great advice!! Need to make saving and investing in you first then what's left you can live on. Frugal and live below your means.
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Old 01-27-2023, 09:03 PM   #14
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I would suggest doing a budget if you aren't already doing so. That way you know where your money is going and where you might be able to cut back. Try to increase your income with additional work via overtime or a part time job can be helpful.
Also keep in mind you may not need the million dollar magic number we hear hyped all the time. It really depends on your spending needs. There are plenty who do fine on way less. If the roof over your head is paid for and you have no others debts by the time you want to retire it will help a lot.

There are a lot of great videos on YouTube.
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Old 01-27-2023, 09:34 PM   #15
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Pay yourself first before anything else. After a few years it will snowball....
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Old 01-27-2023, 10:05 PM   #16
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A couple of ways I saved money was switching to T-Mobile prepaid plan for a flat fee of 15/month. It includes unlimited talk and text with 3gb of data. You have to order it online and they overnight you a SIM card. If you go to the store they won’t do it.

I also have you tube tv for 64.99/month and then share it with a friend so the cost is half. Find the cheapest grocery store in your area and shop there. I also shop for car/home insurance every couple of years to see if I can do better. Good luck).
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Old 01-27-2023, 10:27 PM   #17
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A couple of ways I saved money was switching to T-Mobile prepaid plan for a flat fee of 15/month. It includes unlimited talk and text with 3gb of data. You have to order it online and they overnight you a SIM card. If you go to the store they wonít do it.
How long have you had that plan? The least expensive plan I see is 40 a month for 10 gigs at prepaid.t-mobile.com.
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Old 01-27-2023, 11:13 PM   #18
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Old 01-28-2023, 04:19 AM   #19
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Originally Posted by rodi View Post
Welcome msincogneato -

The advice given is good, but not easy to accomplish. Agree completely with Aerides that the very first step is to pay off any credit card debt and other personal debt and to establish a decent emergency fund.

But lets talk about the elephant in the room. You say you can't do much more than 5% into your 401k.... So you'll have to figure out how to improve that.

The hard part is to cut your spending so you CAN save/invest. It will not be easy. Go for the low hanging fruit first... the obvious stuff like starbucks vs homemade coffee, cut down on meals out and cook at home... bring in lunch from home. The next low hanging fruit is every recurring expense... Cell phone carriers - there are a lot of good deals on plans that have unlimited talk/text/data for $30/month... If you're paying more, change carrier. Cable - cut the cord. If you have a boatload of streaming services, look at reducing to one or tow. Car/home insurance, shop price every renewal. When I got serious about cutting expenses I was able to cut a few hundred per month with very little effort... that money was then redeployed to debt reduction and savings.

There are some people on the forum who got here through hefty salaries, but lots of others who got here through being frugal. You'll need less money to support retirement if you learn to live on less money.

If you have credit card debt look at doing snowball payments... Have a fixed amount you allocate to retiring the debt. Pay the extra on the highest interest payment card till it's paid off, then reallocate that extra money to the next highest card... until they are all paid off and you pay them in full each month.

You've got this. But it will take discipline. Welcome to the forum!!!
Perfect! +1
To take some of the sting out consider taking a few hours out to do a number of searches on your computer for making a list of free and low cost activities. Spending money for entertainment does not necessarily equate to the most enjoyment. I did this for a close friend who was the definition of "spending like a sailor on shore leave". He also lost most everything and landed in deep debt. The list I made filled more than 2 pages single spaced. Most of the activities my wife and I have been doing for years were on that list because we enjoyed them.

Cheers!
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Old 01-28-2023, 06:20 AM   #20
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Msincogneato; Great advise so far. With food so expensive, I would check the grocery flyers weekly and find the bargains especially for protein. Plan your weekly menu around those specials. Use a crock pot to prepare low cost, nutritious meals that save you time and money. Stay away from restaurants.

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