Most experts state that it’s better to start saving for retirement early so that one can reap the benefits of compound interest. However, there are some steps that one can take to increase their retirement savings if they start saving late. The bottom line here is, it’s never too late for one to get started.
Building a Bigger Nest Egg
Retirement has changed dramatically over the years. This is because the standards of living at an advanced age have also changed drastically over the last half a century. This means that the old benchmark of planning to replace 75% of pre-retirement income isn’t sufficient anymore. A 100% replacement rate would be a safer bet.
If one has big retirement plans that require money, such as new hobbies or travelling, then they need to boost their savings to match these plans. Health care costs are also likely to rise in future as well. Taxes may also rise significantly to bail out an ailing economy. So it isn’t obvious that expenses will reduce.
Retire at Age 65 or Later
The concept of an early retirement isn’t realistic for most people. This is because not many of them are adequately prepared for retirement. Working longer will translate to higher benefits. Moreover, one also defers eating into this nest egg for some more years.
One should focus on target-date funds which shift assets into conservative investment as the retirement date approaches. This would help an investor who feels overwhelmed when picking funds. It would be advisable to save something and channel it towards a diversified fund as opposed to doing nothing.
It Isn’t Just About the Money
It would be appropriate to invest not just in pension and saving accounts, but also in human capital. One needs training to be successful in their sunset years. One should thus invest in communities, families and friendships. Such networks are integral in helping one age more successfully.