It’s not too late retirement plan
You may have woken in a cold panic wondering who’s gonna wipe your butt in your old age because you haven’t saved a dime for retirement, but it’s not too late to start a late retirement plan. It is, however, too late to wait any longer. So, start now by downloading the Magic Money Calculator and Late Retirement Checklist!
The 9-step late retirement plan
1. Start now
The first step of nine in the late retirement plan is the most obvious: start now! Don’t dilly dally or dawdle. Retirement is no longer so far in the future for you to picture it.
Like virtual reality, it’s here. It’s now.
Your job now is to face reality. Your responsibility is to take responsibility.
2. Determine where you are now
You can’t figure out how to get to where you want to go if you don’t know where you are. So, get to wurq.
Gather all your statements to all your accounts or, if you’re a modern mo, get online access to all your accounts. Search far and wide to calculate every cent you have and every cent you owe. This includes getting access to that 401(k) you signed up for at that job you had for two months. This means figuring out what happened to that credit card account you abandoned years ago thinking you’d never have to pay it off.
Do you have pension plans anywhere (are there pension plans anywhere?)? Do you own a small IRA at a local bank somewhere? Do you have a 403(b) at a non-profit you worked at during college? Have you already inherited any money that’s in a bank account you never accessed?
Create an account on the Social Security Administration’s website to calculate what you can expect to receive, at present, in Social Security payments once you retire.
Search far and wide. Go high and deep. Get everything. Then, click here and download the helpful Magic Money Calculator & Late-Stage Retirement Checklist to see where you are today in your retirement planning.
3. Maximize retirement plan contributions
Because your future is not so far off, sacrifice today for tomorrow. For your long-term benefit, cut back on your today and put all your extra money in your retirement accounts. Maximize contributions to your employer-sponsored retirement plan.
If you don’t have an employer-sponsored retirement plan or are fortunate enough to have money left over after maxing out contributions to your employer-sponsored retirement plan, contribute to a Traditional or a Roth IRA.
If you’re over 50 years old and have access to an employer-sponsored retirement plan (401(k), 403(b), 457), the IRS will let you make “catch-up” contributions. In addition to the $18,500 regular 2018 contribution limits for 401(k)s, you can make an additional contribution of $6,000. Catch-up contributions for Traditional and Roth IRAs let you invest $1,000 in addition to the regular contribution limits of $5,500.
According to Fidelity, this could mean an additional $1,000 a month after taxes in retirement spending. That’s nice, huh?
If you have any money available after maxing out an employer-sponsored retirement plan – why have you not been investing all along – invest even more money in a brokerage account.
If you’re a low- to middle-income earner, use the Saver’s Credit. Instead of taking a tax deduction on your individual IRA or company-sponsored retirement account contributions, file for the Saver’s Credit. The Saver’s Credit may take up to $2,000 off your tax bill.
Tax credits are better than deductions because they’re a dollar-for-dollar reduction in your taxes. Invest 100% of all your tax refund and tax savings in an IRA or brokerage account and make it work for you. Talk with your accountant to see if the Saver’s Credit is right for you.
4. Be a smart investor, not a greedy investor
Most of those who avoid investing do so because they think investing’s hard. It’s not. Here are 10 super simple steps to start investing and our Super-Simple Investing Guide. Watch our #DFGLive about super simple investing here.
Don’t invest too conservatively. Avoid keeping your money in cash or in interest-bearing accounts. These investments won’t keep up with inflation, which buys you less with each dollar.
Always be an investor. The trend is to migrate to more conservative investments, like bonds and CDs, as we age. To keep up with inflation, this isn’t a good strategy. Keeping 20% to 40% of your investment money in large cap, medium cap and small cap stocks makes sense. For definitions of those terms, get our Super-Simple Investing Guide from above.
Don’t be too aggressive – think Goldilocks. Avoid hot investing tips and today’s trends. The rare person who gets rich off these investments make the news, but most people get burned. So, don’t gamble but follow a more certain investment strategy.
As we said in our #DFGLive above, you don’t have to do all this on your own. Hire a robot!
5. Work longer, and work for yourself
Your investment strategy should be focused on your cash flow and not savings. The latter works, but the former is better. If you can work longer for your current employer or a new employer you’re more passionate about, do it and go hard on steps three and four.
Go into business for yourself in addition to or instead of working for someone else. Again, the latter works, but the former is better. Today’s gig-economy affords way more options to create side hustles and main hustles. Within three years, we were making $60,000 from our own freelance writing.
Sell your art on Etsy. Work for TaskRabbit or Lyft. Become a consultant. You most certainly have a skill or expertise that other people and businesses need. Get paid giving advice.
However you go into business for yourself, open either a SEP or a SIMPLE IRA and invest as much of your earned money into this late retirement plan to have more money in retirement.
6. Get insured
It may cost more than you’d like, and you may not get all the coverage you want, but it’s time to call in the big dawgs. Apply for long-term care insurance (LTCI). If approved, LTCI will get you in-home care if you become disabled and it’ll help pay for a retirement or nursing home facilities if needed.
Most queer people don’t children to take care of us as we age, especially as our bodies and systems deteriorate. Even if we do, we don’t want their last memories of us changing our adult diapers.
7. Get married
For the love all that is holy and sacred, if you have a partner marry him. For starters, when one of you passes away, the other will inherit all your marital assets and anything not excluded as a marital asset in your marital agreement, should you have one.
Likewise, Social Security Spousal and Survivor benefits only apply to married couples. With the spousal benefit, you or your spouse can receive the higher of 50% of either worker’s benefit (whoever worked or earned the most). With the survivor benefit, the surviving spouse receives the larger of 100% of theirs or their deceased spouse’s Social Security payment. You need to be married for a year to qualify for the spousal benefit and nine months to qualify for the survivor benefit.
These benefits could seriously change the dynamic of your late retirement plan and your retirement.
8. Consider a reverse mortgage
Reverse mortgages today aren’t what they used to be. A reverse mortgage lets you systematically take equity out of your home to support you through retirement. They’re not for everyone, but reverse mortgages for the right person are great.
If you wish to leave your home to heirs, only the amount of equity not paid to you can be inherited. Your whole property cannot be inherited, as a reverse mortgage relinquishes your full ownership of your property.
They’re not the answer to all your late retirement plan concerns, either. You’ll still pay real estate taxes, utilities, and hazard and flood insurance premiums. This is cost-prohibitive for some retirees.
Talk with an unbiased professional and your family before signing up for a reverse mortgage.
9. Pay off debt
Interest payments on debt erodes savings. Pay off as much debt, ideally all debt, before you retire. Then, avoid debt like the plague.
There’s a current trend of retirees buying newer and bigger homes and taking on newer and larger mortgages. This doesn’t make sense and is risky. Avoid this and similar desires that detract from living your retirement well.
As you can see, all hope isn’t gone, but don’t wait another minute. Make the commitment and do what’s necessary to protect your future. If you’re not exactly sure where you are in your retirement planning, click here to download the exclusive Magic Money Calculator & Late-Stage Retirement Checklist.