4 Rules for Playing Catch Up on Your Retirement Savings

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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

9 COMMENTS

  1. This topic really hits home! I’m almost 40 and yet haven’t fully started on retirement planning. Well, I sort of did and kept on hitting some snags. So, yeah you could say there is some form of anxiety going on. One of the snags is quitting from employment without immediate plans to return to the labor market. With NO cash inflow, I had to resort to liquidating some of my equities before reaching retirement age. Hopefully, I could get back on track with my retirement planning and could really be diligent at saving for it.
    As to IRA, it is something that is not available in my country yet. People in my country aren’t too keen on retirement planning. Hopefully, there’s been a bit of change with the proliferation of blogs such as this that promotes personal finance.
    tabby recently posted…Philippine Stock market Performance a Day after the May 9 Presidential ElectionsMy Profile

  2. All our hard-earned money goes to our children’s school and university. We believe in paying for our own children’s education and steering from college free-stuff. We believe in working hard for our education. Now that my husband and I are approaching golden a years and still paying for our 4 children’s education, a lot of things are put on hold for a while. Right now, my husband and I are very thankful for his employment up to the present, and a fully paid home since 2008 :-).

    • @Rebekah Wow! You’re children are very lucky! They certainly would NOT have to deal with student loans and as such. Congratulations in doing this for your children. I just believe that providing for children’s education is a parental responsibility. Education is fundamental is setting up children to have a future. It’s up to the children whether they will make use of the gift of education or squander it long after they leave their parents’ nest.
      Paying for 4 children’s education could be tough competition for retirement savings. But if you could have that little room to save for your old age, then go for it. That’s the beauty of personal finance, we could always tweak things depending on our personal circumstances.
      tabby recently posted…Philippine Stock market Performance a Day after the May 9 Presidential ElectionsMy Profile

    • Well it sounds like you have your priorities in place and have been working hard at making them a reality, so congratulations there. I am not sure a lot of people could hold that up throughout all the years, dedicating that much to their children with all four of their education, but again well done. I really like to hear stories like this, and they are certainly better than the opposite, which is probably way more common. Interesting stuff, and thanks for sharing.

  3. We’re still young and keep saying we still have time, but then again saving for retirement is something we should maybe start doing immediately. Thing is, it’s difficult, we just bought a home and we have years left ’till we fully pay it. We also want to start a family. I can’t imagine saving money and taking care of children go hand in hand. We WILL start saving, both my husband and I have big plans that involve retiring sooner than our parents did, but right now it’s really difficult to set anything aside.

  4. I am 41 and already thinking about life post retirement. I have invested in some annuities and have some fixed bonds etc. This blog will really help me in investing in a more versatile manner. The volatile economy and a constant fear of recession make it imperative that we start saving now and I think we should not be tempted by promises of large profits. Saving in no or less risk involving tools is always a good idea.

    • Well that is good that you are thinking about it and planning ahead, and I am 29 and I am doing a lot of the same. I do not like it, at all really, but it is just a necessity of life and something that everyone will tell you is the right decision. I am actually in a little weird situation though too, because we have family history of not really living to be that old, so I kind of have to weigh that in, but I still am dedicated to saving up for retirement. Interesting stuff, and important stuff, and thanks for sharing,

  5. For lack of a retirement program like IRA in my country, many retirees depend on social security benefits which may not amount to much considering the cost of maintenance medicine. It’s very important, therefore, to take care of our body early on so we can last the long haul without being dependent on medicine. Another area that I’m considering is mutual fund investing. So far, however, I have yet to find out what the actual costs are for maintaining a stock portfolio under this investment type. I know that mutual fund companies do charge for keeping the stock certificate, a yearly fee for maintaining your account, and a fee when selling your stocks but I have no idea how much. We need to invest on a long term basis in order to recoup these charges and earn from stock market appreciation, if any.

  6. Well I think that if there is one thing I can take away from this it is that I am certainly not doing the first one, saving creatively. In fact, I am probably doing the exact opposite, but then again I am someone who typically likes things to be set and in order, so maybe it is best for me. Taking a bit out of each paycheck is really all I need, but perhaps the methods mentioned here might have something for me. I will definitely look into it, so thanks for sharing.

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