When I ask my clients about retirement, some of them will say exactly that – that they just assume they will work until they die.
The problem with this plan is that many people end up leaving the workforce earlier than they intend to for three main reasons:
- they have health problems and can’t continue working
- they need to quit to take care of a family member
- they lose their job and can’t find a new one, or at least not one with the same pay
No one wants to think that one of these things will happen to them! But they can and do happen to people all the time.
One of my first clients was a woman whose husband had a stroke, and she needed to reduce her work hours to help care for him. They ended up downsizing to an apartment and using the equity in their home to create an investment fund to supplement their income. Luckily they had that resource to draw on!
According to a 2018 study by ProPublica and the Urban Institute, 56% of workers over the age of 50 have been pushed out of jobs before they would have retired willingly. The study also found that only one in 10 of them got another job that pays as well.
Having some savings – even if it is not a full retirement fund – can help keep these situations from completely derailing you financially.
How late is too late to save for retirement?
Obviously, the earlier you start saving for retirement the better. But even if you are in your 50s or 60s it’s not too late!
I recently did a call with someone who was age 60 and had just started contributing to his workplace 401K that year. He is in good health and expects to keep working for a long time. If he is able to keep working, he can still build a retirement fund. If, for example, he is contributing $670 per month, and his employer does a 50% match making it $1000 per month, at 8% return he would have $336,000 at age 75. This, combined with Social Security, would give him the possibility of fully retiring at 75 and being able to enjoy his final years without working. This may or may not be the right solution for him, and it assumes that he can keep working until 75, but it is one possibility.
So, when is the best time to start saving for retirement? Due to the magic of compounding interest, the best time to start saving for retirement is honestly as soon as you start working. The second best time is now!
Not sure how to get started? Let’s talk! Together we can take a look at where you are and come up with a plan to help you save for retirement. I offer affordable rates, up-front pricing, and a free 30-minute no-obligation intro video call. Schedule an appointment today!
Source: https://www.propublica.org/article/older-workers-united-states-pushed-out-of-work-forced-retirement
