It’s striking to know that only 39% of adults who are saving for retirement started doing so in their 20s. Many are initiating this crucial financial step later in life, and if you’re in this situation, rest assured that you’re not alone.
Numerous reasons can contribute to this delay, including hefty student loan repayments, the high costs of raising a family, or simply grappling with the cost of living. Regardless of why you may have delayed your savings plan, the crucial factor is your actions from now on. By building financial independence across different sectors, you can optimize your current assets and expedite your retirement savings in no time.
- Embark on a Side Hustle
To make the most out of your retirement savings, look for ways to enhance your earnings. Part-time or temporary work can significantly supplement your income. Medical professionals, for instance, can explore side hustles like:
- Medical Surveys: Numerous platforms are on the lookout for expert insights from medical professionals and offer payment for your valuable opinions.
- Locum Tenens: Temporary or locum tenens roles can fill interim positions in a hospital staff setup.
- Telehealth: With the surge of remote work due to the COVID-19 pandemic, telehealth has become a convenient side hustle for medical professionals that they can manage from home.
These ventures can fit around your full-time job commitments and provide an additional stream of income for your retirement savings.
- Explore Passive Income Opportunities
If you’re unable to commit time for a side hustle, consider passive income streams. These allow you to earn money with minimal daily effort. As an older adult, you can consider passive income options like:
- Real Estate Investing: You can participate in passive real estate investment funds, sidestepping the stress of purchasing and renting out properties.
- Stock Market: Hiring a financial professional to manage your investments can generate passive income.
- Selling Expert Knowledge: Leveraging your experience to create instructional content for sale online can be a lucrative passive income source.
- Leverage the Advantages of a Roth IRA
A Roth IRA offers many advantages for those looking to save for retirement. Unlike a traditional IRA, your contributions are post-tax, allowing you to withdraw money tax-free after 59.5 years of age. Additionally, there are no minimum distribution requirements, offering you the flexibility to decide how much you wish to withdraw.
- Minimize Unnecessary Spending
To increase your retirement contributions without expanding your income, consider curbing your spending. This could involve trimming down expenses on luxury trips, beauty treatments, or home renovations. Implementing a strict budget could unlock additional funds for your retirement savings.
- Establish an Automatic Savings Plan
An automatic savings plan simplifies the process of setting aside money for retirement. Through this system, a predetermined amount is transferred from your checking account to your retirement account each month, making retirement contributions a regular aspect of your expenses.
- Defer Your Social Security Benefits
Delaying your Social Security payments until you’re 70 can increase your monthly benefits, especially if you’re a high earner. This could mean drawing from another retirement account for living expenses or continuing to work past retirement age.
- Utilize the Spousal Benefit if You’re Married
The Social Security spousal benefit is a great strategy if you’re married. It allows the spouse of an eligible individual to claim a benefit that amounts to either 50% or 32.5% of their retired spouse’s insurance payment, given that they are at least 62 or taking care of a qualifying child.
It’s important to remember that it’s never too late to start saving for retirement. Regardless of whether you’re 25 or 55, various strategies can help ensure a comfortable retirement. The IRS even has policies that permit older adults to contribute more to retirement accounts, such as a Roth IRA, than younger individuals. Leveraging these “catch-up” contribution strategies can significantly bolster your retirement savings in a shorter period.