As of 2016, as many as one-third of all Americans still have nothing saved towards their retirement, and of those Americans, approximately 25 percent are age 45 or older. While this can be a stressful predicament in which to find yourself, there is still much that you can do to play “catch up” towards your retirement savings needs.
In this post, learn about the 4 basic rules experts recommend for late-blooming retirement fund investors.
Rule #1: Save creatively
Gone are the days when the only ways to save towards retirement were to sock away larger sums of money into higher-risk investment vehicles. Today, there are a variety of creative techniques to maximize the cumulative value of investing smaller sums.
Micro-investing apps
Apps like Acorns allow you to invest micro sums (the equivalent of “spare change”) simply by rounding up on your receipts when you make a purchase. The app then invests the funds into weighted risk index funds (you get to choose the level of risk you are comfortable with).
Micro-savings apps
Apps like Digit are FDIC-insured up to $250,000 just like traditional investment vehicles. Digit uses its own internal algorithm to calculate how much it saves for you based on how much you spend.
Bank Savings Accounts
Many banks also offer similar savings plans where you can elect to spend and save at the same time and then allocate the saved funds in a variety of investment directions.
By keeping the overall investment level low monthly, investing begins to feel much more manageable even if you don’t have a lot to invest at any one time. It also keeps risk more manageable if you need most of your spare change just for living.
Rule #2: Downsize
A global focus on sustainable, “green” living is making it much easier for today’s employees to downsize on lifestyle in the interests of saving more towards retirement.
From downsizing to a more economical car that burns less fuel and offers lower monthly payments to selecting a smaller living space with lower utility bills and less maintenance upkeep, there are many ways to downsize and invest the difference towards your retirement needs.
Another popular option today is trimming “optional” or “luxury” expenses, including pricey cable television packages or magazine subscriptions. And with the number of credit cards now offering perks to cardholders ranging from cash back to cash bonus incentives, airline mileage and discount spending clubs and more, the card you choose can also add to your bottom line now and later upon retirement.
Rule #3: Opt-in for a self-directed IRA
A self-directed Individual Retirement Account, or IRA, is becoming an increasingly popular option in this age of investing uncertainty.
By un-linking a part or all of your invested retirement funds from the ongoing market fluctuations and making alternative investments instead, you can take charge of your investment future whether you have many decades or just years left to save towards retirement. Because investments in a self-directed IRA are still tax deferred, you get a greater variety of investing options and more control over how your funds are invested.
Here are some examples of investment vehicles the funds in your self-directed IRA can be used towards:
Real estate investing
Private equity investing
Private stock
Joint venture startups
Leases
Limited liability corporations (LLCs)
One of the best aspects of self-directed IRAs is that they can be used in conjunction with traditional IRAs, micro-investing and micro-saving and many other types of retirement-focused investment options to form a complete and risk-balanced investment portfolio.
Rule #4: Invest more of your time
Unless your current career is all-consuming time-wise, chances are strong that you have a few extra hours per week to invest into boosting your retirement savings contributions.
With more and more Americans taking on one or more side jobs in addition to a main job, this is becoming more common. As well, there are increasing options for retirees to rejoin the workforce and gain some extra income as well as valuable benefits.
The additional work you take on need not be a “traditional” job, although certainly there are many employers who would happily employ you for nights or weekend shifts.
Here are some creative ways you can ramp up your savings efforts and make catch-up payments:
Earn micro-cash by using your phone. Cash-generating apps like Swagbucks or SlideJoy turn the time you spend waiting in line into cash.
Generate passive income through blogging. There is a solid financial reason blogging is so popular today. By placing small ads on each page of content, every hit to a blog can be earning micro-cash for its owner.
It is normal to feel anxious when you realize you are getting closer to retirement and you haven’t saved enough. With keeping your financial goals close, sticking to them, and some time, you can begin to saving more consciously towards your retirement goals.
Informational credit to Accuplan Benefits Services
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