Any advice for someone starting saving for retirement VERY late?

[Exchme]

Work as long as you can, save as much as you can. If there is an opportunity for overtime, take it.

Using age 70 for retirement as a starting point, you may be able to withdraw 4.5-5% of the portfolio each year, so $20-23,000 is needed in the portfolio at age 70 for each $1,000 in annual spend. Given your modest means, that's pretty brutal math, so the very best "investment" is delaying claiming SS until age 70. Lifetime income that is inflation adjusted can't be beat here.

It would be a good exercise to go to the SSA.gov website and see what they project for your benefit at various claim ages and remember that Medicare takes some. Obviously any gap between your lifestyle and the benefits need to be covered by your fledgling portfolio (plus Medicare takes a chunk), so looking at this might be a way of gauging whether you are on track or living too large.

My bet is that since you have a "can do" attitude and willingness to work, that your retirement will be successful. (FWIW, I would guess the swindler former fiancé ends up broke and sad.)

 

[target2019]

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.

You contribute 5% to a 401(k)? Are you receiving the 3% match now (on your 5%)?

Depending on your plan's investments, it may make sense to up your 5% contribution to capture more of the match.

A Roth-IRA sounds like a good idea too.

 

[mystang52]

If you're not doing this already, brown-bag your lunch. Savings from this alone is surprisingly huge. Depending on your workplace set-up and your hours, brown-bagging breakfast is likewise a big savings.

 

[rodi]

You contribute 5% to a 401(k)? Are you receiving the 3% match now (on your 5%)?

Depending on your plan's investments, it may make sense to up your 5% contribution to capture more of the match.

A Roth-IRA sounds like a good idea too.

I took it to mean she got a 3% of her salary match... so her 5% plus another 3% contributed by her employer for a total of 8%. But I could be wrong.

Either way, she should figure out ways to trim spending so she can contribute more.

 

[Koolau]

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.

You have already done the hard part in your quest: You have decided to save. The details, while important, will be simpler than that one decision was. Take heart. You have plenty of time. You have lots of folks eager to give advice (true, it's free advice, so keep that in mind.) But it's not so difficult as it seems right now. Emphasize saving - and the investment stuff you will figure out as you go.

Best of luck and check back often.

 

[athena53]

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.

I have Ting (which uses the T-Mobile network) and my plan includes unlimited talk and text and 1 gig. By keeping Cellular Data off unless I need it (when no Wi-Fi is available), my monthly bill is under $19/month. Thanks to the people here, who first suggested it!

OP, you've been given good advice about reducing expenses and I think that's a big part of it. My rule is not to pay for stuff that's not worth it to me (loaded TV packages, the latest and greatest phone, books when I have a great library system, etc.). Bonus: if you live on less, not only are you able to save more, but you can live on less in retirement because you've gotten used to living on less take-home pay.

 

[rodi]

t-mobile has age 55+ plans that range from $27-35/month.
https://www.t-mobile.com/cell-phone-plans/unlimited-55-senior-discount-plans?INTNAV=tNavlans:UnlimitedAge55

 

[Samsung4321]

51 ... I never saved much for retirement

Understanding these most basic example spreadsheet calculations will provide a foundation to build further understanding:


The final goal is to retire with at least enough capital to provide enough income for long enough:

With return of 5%, inflation 3%, to 95 from 70, $1 of capital [-]in a fund, $0 in fund at 95 will allow withdrawals of:

= PMT((1 + 5%) / (1 + 3%) - 1, (95-70), -1, 0)
= $0.0509 / y


The intermediate goal is to accumulate enough capital at retirement:

With return of 5%, inflation 3%, to 70 from 51, $0 initial capital, $1 of capital [-]in a fund will require payment into fund of:
= PMT((1 + 5%) / (1 + 3%) - 1, (70-51), 0, -1)
= $0.0440 / y


Multiply payments by factor to give required $amount withdrawals.

For example, if you want $100,000 / y withdrawal in retirement, $100,000 / $0.0500 = 2,000,000 multiplication factor.

 

[2HOTinPHX]

t-mobile has age 55+ plans that range from $27-35/month.
https://www.t-mobile.com/cell-phone...scount-plans?INTNAV=tNav:Plans:UnlimitedAge55

We've been very happy T-MOBILE customers for many years.
Funny story how that came to be. We were probably one of the last hold outs on planet earth for smart phones. We had our little cheapy dumb phones that were working just fine for us. Who needs those fancy phones
Well we were out test driving a new car in an area we were unfamiliar with and we got lost. It was a two seater so the salesman wasn't with us. We called him on our dumb phone and he tried to talk us in. It wasn't working and wifey was getting really frustrated and embarrassed. So we pull in a parking lot and found a lady with one of those fancy smart phones and she was able to get us a map and directions back to the dealership. It was one of those weird designed circular roads within another road hidden inside another road. The salesman asked why we didn't have smartphones and we said we didn't want to pay 500.00 to 1000.00 each for new phones. He suggested we go to T-Mobile and ask them what deals they had that included free smart phones. We were like free phones....ya right.
Well our next stop on the way from the dealership was the local T-MOBILE store and sure enough when we sceptically asked they showed us a few free phones available for commiting to 2 years service. Not fastest latest greatest phones but a huge upgrade from dumb phones. We have been free smart phone T-MOBILE customers ever since. Got on their 55 plus plan when we became eligible. Upgraded to our second free T-MOBILE smart phones a few years ago and have been very happy customers. Currently paying 60.00 a month total for two 5G phones all unlimited service. Guess we'll stick with that though the advertisements for 15.00 a month services always catch our attention.

 

[intent]

What a terrific thread. I just love to see all of the support and excellent advice. Reminds me why I liked this community so much when I first joined years (decades) ago.

To the OP, immerse yourself in this community. Read, read, and read some more. You'll continuously find helpful bits of advice and exceptionally useful motivational posts throughout the forums.

Also, while I agree that you should follow the advice that has already been posted and really lean into your accumulation, I'd also recommend you don't lose sight of your work-life balance. You might have 20 years of work still to go, and while you are on the right track to build up your assets for an enjoyable and comfortable retirement, those 20 years should be enjoyable and comfortable too.

Many here have already suggested seeking forms of entertainment that are low-cost/free, and that is great advice. You should also probably take a hard look at your work-life. It doesn't need to be fun, exactly, but with 20 years to go you don't want it to be drudgery either. Put some serious thought into your current everyday existence. What makes you happy? What doesn't? How can you change the things that feel like they're taking away from your joy?

IOW, while you're finding deals and making changes that directly impact your spending, keep your eye out also for all of those things - big and small - that directly impact your happiness and make those changes too. You CAN enjoy the next 20 years while at the same time preparing for retirement.

 

[pb4uski]

t-mobile has age 55+ plans that range from $27-35/month.
https://www.t-mobile.com/cell-phone-plans/unlimited-55-senior-discount-plans?INTNAV=tNavlans:UnlimitedAge55

We have Red Pocket Mobile. AT&T or Verizon or T-Mobile networks, your choice. Unlimited talk/text and 3GB data a month for $22 including taxes. 5G service and wi-fi calling.

We buy a new phone every few years... good but not top of the line. Recently upgraded to Google Pixel 6a for about $300... best cellphone that I have ever had.. very happy with it. We had good luck with Motorolas too but I like the Pixel much better.

 

[Gumby]

From my experience, the more you can trim expenses without having to live like a hermit, the better. An especially nefarious way that your money disappears is through monthly subscriptions. So here are some ideas.

1. Cut the cable - it is expensive and mostly a vast wasteland of vacuous nonsense and ways to waste your time. If you must watch TV, you don't need every streaming option. The young wife makes do with Netflix, Amazon Prime (which we have anyway) and PBS Passport (I don't watch TV at all).

2. Get the cheapest cell phone plan and the cheapest cellphone you can. Don't upgrade just because a new iPhone comes out. Keep your old one until it no longer functions.

3. Don't pay for games and apps on your phone. Use the free ones, even if you have to put up with ads.

4. Don't buy a new car until your old one is no longer repairable. If you do get a car, consider a used one.

5. Don't eat in restaurants or drink in bars. You can cook better food and make better drinks at home. If you want to get together with friends, have them come over to your house. Make it pot luck and everyone BYOB.

6. Don't waste food. If you have leftovers, use them. Pack them for lunch the next day instead of buying your lunch (actually, you should never buy your lunch) or work them into dinner the next night. When you grocery shop, plan ahead and shop a week at a time. Buy things and plan several meals that will use them all up over the course of the week. Make your own coffee and bring it in a thermos. Buy the store brands.

7. Learn to love Goodwill. I wear almost exclusively flannel shirts and jeans in the winter. I buy the shirts at Goodwill. The young wife often gets her jeans there. We buy a lot of other household stuff there too.

8. If you think you want to buy something, write a note in your calendar for next week to decide. A lot of times, you may decide in the interim that you don't need it.

9. Never run a credit card balance if you can at all help it. The interest rate is extortionate.

10. Search on line for free or cheap things to do in your area and do them instead of paying for entertainment.

I wish you well on your road to retirement. I'm sure you'll do great.

 

[threeonesix]

Lots of great advice so far. Here is the one piece of advice that seemingly nobody ever considers for themselves: get an education. Nothing will increase your retirement savings faster than earning more money. The fastest way to earning more money is through an education. If you do not have any degrees, earn one or more. If you do have a degree(s), go for your Master's or earn a degree in a better-paying field. When talking about saving for retirement everybody jumps straight to cut your expenses. Which is a fine idea for sure. But it doesn't hold a candle to increasing your earnings. If your earnings are low presently you will likely qualify for financial aid options that you don't have to pay back. Cutting expenses can put upwards of $1,000/mo in most people's pockets. Getting a better paying job through education can double or triple your earnings, if not more. Education isn't always the answer, but it is an option to consider.

Another option could be to start your own business, something you can do in evenings and on weekends. Things like dog walking/sitting, cleaning homes and businesses, interior decorating, etc.

 

[Markola]

^^^^^^ Earning more but living the same and investing the difference is great advice, of course. Every field might be different. Another degree might work in some professions while in others, like mine, one just needs to change jobs every 3-4 years to run up the score quickly.

It’s amazing how much free education there is today. One can study SalesForce Trailhead courses for free, get various certifications, and then pursue all kinds of lucrative opportunities in a booming field, from $60,000/year (after 3-6 months, no degree required) for SalesForce administrator positions, up to $300,000 or more in a few more years as a SalesForce systems architect.

For those who want to finish a degree, Saylor.org is a place to look for for-credit, transferable college level courses in all kinds of subjects for FREE and on and on.

I also enjoy the Side Hustle Show podcast for a wealth of, well, side hustle ideas.

 

[SecondAttempt]

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

And don't forget...live beneath your means.

 

[AirOps]

Good advise here, might also add to look into state, county and local municipality work. Many offer a good pension plan to supplement the basic SSA benefits.

Before you say "I'm not qualified", think again, find something you want to do. At your age, and you give a damn, I can see promotions.

 

[Sanstar]

Along with increasing education consider professional certifications. Everything from CPR and First Aide to Project Management, CDL, Lean Six Sigma, security training, fork lift operator and of course the plethora of coding certs.

One of the C suite members I worked with put a lot of stock in certs. She said MBA’s are obsolete a couple years after earning them. Certs are valuable because after getting them you have to complete continuing ed units to keep up with the latest and greatest.

 

[Freedom2021]

Been there done that - I'm here to tell ya, if you are serious and make a plan and stick to it - then yes, you got this. Follow every one of the savings suggestions that you can somehow in some twisted way adopt or integrate into your plan - make it work for you.
In a word, you need to become a lot more savvy and cautious with expenditures and money in general.

You are indeed way behind but if you think out of the box and make unorthodox choices going forward, you will catch up or at least reach a comfortable level.
A lot can happen in the next ten to 15 years.... it may look dire right now but it is amazing how quickly you can move forward.

Just do it, you can't afford to lose any more time and forget about blaming others or your EX or the state of the nation - none of it matters. Going forward you will be smart about money and take the time and make the effort to stay continuously engaged on forums such as this.
What matters going forward is your laser focus on your new goals!

Be strong and unconventional about your choices, tell your friends you can't afford X right now - over and over again. Smile and be firm and happy about your choices, because you know good choices will bear fruit.

I started with an Emergency Fund for six months of expenses and worked out what amount I could pay toward debt (debt snowball style). I decided I needed to somehow make extra money that I threw into savings, so I did - it was tough but I kept track of the numbers and voila, my plan (very slowly) improved my finances.
If you do not have an EF then every time something happens you end up in financial trouble so it makes sense to have an EF stash, you'll sleep better I promise.

Once you hit a few goals you'll be tickled pink - you did it because you are awesome and dedicated. The second you get serious you've already won the battle.
Go for it - you ain't got nuthin' to lose ...

 

[jrendt]

I just switched to Mint. 2 lines w/ 4gb each for 3 months was $112 including taxes. Much less than the 160 I was spending on verison for 3 lines of unlimited. If you don't use much data; it's a good deal.

 

[Retired Expat]

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.

Sad to say but now is the time to buckle down and fix this! Look at where every dollar goes and promise yourself to cut out all non essential spending. Beers with the guys after work, not now, coffee, cigarettes stop! Start cooking for yourself, buy in bulk and fill your freezer with homemade meals bought cheaply. Taking the car to go somewhere? Combine it with other errands and drive less. Cut the cord on cable and streaming and sports packages. Get a library card and read a book.

Seriously dude, there is no east answer other than to spend less, make more and save. So take a side job, roommate or boarder, move if it makes sense.

All of this should put money away and hopefully change some bad habits learned over the years. Easier to do it all when you are working than when on a fixed income. Maybe just try it for a year and see how it feels and what your finances look like

 

[maestro]

It’s NOT too late! THIS: .... 5% is ok to get you started, but save till it hurts to get that % up...... Best Wishes.

+1 Saving HAS to hurt now, but you won't regret it in 15 years. No dependents for you now? Contribute 10-15% on 401k,. My lowly, humble opinion. You can do it.

 

[daylatedollarshort]

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.

+1. If you can figure out how to live well on an amount close to what your future SS benefits will be, then the more you can save now and the less you will need to save to fund your future retirement. We also found it helpful to go over and optimize every expense. Most people probably have a lot of painless cuts they can make, like buying toilet paper in bulk, online and by the pound is much cheaper than most supermarket prices. You can use cloth instead of paper towels. Go around the house with a Kill a Watt looking for energy wasting appliances. Have all LED lights inside and solar outside. Take your lunch to work. Do meal prep on the weekend so you don't go out for fast food.

Ben Franklin is often quoted as saying something along the lines of watch the pennies and the dollars take care of themselves.

 

[frayne]

Welcome, it's never too late to start. All good advice given above and I'll add, don't add any more debt to your situation. Pay off credit cards monthly, re-evaluate your insurance coverage and increase your deductible(s) if possible. Before any major purchase ask yourself these three things; do I really need it, are there better or more cost effective alternatives and last and most importantly, do I have the cash to buy it. Good luck and you got this.