If you are over 40 and haven’t started planning for retirement, you might feel anxious or overwhelmed. You are not alone. According to a Bankrate survey, nearly 25% of workers haven’t contributed to their retirement accounts in a year and 56% of workers feel they are behind on their retirement savings.1 But don’t panic. It’s never too late to start saving and investing for your future. In this post, we will share some tips and strategies to help you plan for retirement over 40 and make the most of your money.
Assess your current situation
The first step to planning for retirement is to assess your current financial situation. You need to know how much you have saved, how much you owe, and how much you need to save. To do this, you can log in to your Voya online retirement account experience, connect your outside accounts with your Voya account, to see your full financial picture. Once you do that, here are some questions to ask yourself:
- How much do you have in your retirement accounts, such as your workplace retirement plan, IRAor Roth IRA?
- How much do you have in other savings or investments, such as stocks, bondsor real estate?
- How much debt do you have, such as mortgage, student loans, credit cardsor car loans?
- How much income do you expect to receive from Social Security, pensionsor annuities?
- How much do you spend on your living expenses, such as housing, food, transportation, health careand entertainment?
- How much do you want to spend in retirement, and what kind of lifestyle do you want to have?
Once you have a clear picture of your current situation, you can estimate how much you need to save for retirement and get an estimate of your health care expenses in retirement by using the myOrangeMoney® calculator1. A common rule of thumb is to aim for 80% of your pre-retirement income, but this may vary depending on your personal goals and preferences.
Set your retirement goals and priorities
The next step to planning for retirement is to set your retirement goals and priorities. You need to decide when you want to retire, how long you expect to live and what kind of lifestyle you want to have. You also need to consider your health, family and personal interests. Here are some questions to ask yourself:
- When do you want to retire, and how flexible are you with your retirement date?
- How long do you expect to live, and what are the chances of living longer or shorter than average?
- What kind of activities do you want to do in retirement, such as travel, hobbies, volunteeringor working part-time?
- Where do you want to live in retirement, and how will that affect your cost of living and taxes?
- How important is it for you to leave a legacy or inheritance to your family or charity?
Once you have a clear vision of your retirement goals and priorities, you can align your saving and investing strategies with them. You can also adjust your goals and priorities as your situation changes over time.
Boost your savings and investments
The final step to planning for retirement is to boost your savings and investments. You need to increase your income, reduce your expenses and optimize your portfolio. You also need to take advantage of tax-advantaged accounts and employer benefits. Here are some tips and strategies to help you boost your savings and investments:
- Maximize your contributions to your retirement accounts, such as your workplace retirement plan, IRA, or Roth IRA. If you are over 50, you can make catch-up contributions to increase your savings.
- Reduce your debt, especially high-interest debt, such as credit cards or payday loans. Paying off debt will free up more money for savings and investments.
- Cut your expenses, especially discretionary expenses, such as eating out, shoppingor entertainment. Saving even a few dollars a day can make a big difference over time.
- Sell unwanted items. Every extra dollar you earn can go towards your retirement fund.
- Diversify your portfolio, and invest in a mix of stocks, bondsand other assets that match your risk tolerance and time horizon.
- Review your portfolio regularly, and rebalance it as needed to maintain your desired asset allocation and risk level. You can also adjust your portfolio as you get closer to retirement or as your goals and priorities change.
- Take advantage of tax-advantaged accounts and employer benefits, such as an employer match, health savings accountsor flexible spending accounts. These can help you save more money and reduce your tax burden.
- Consider meeting with a financial professional to help you get organized, and better positioned to reach your financial goals.
