If you’re in your 40’s or may even almost 50 and you don’t have any retirement savings yet you might think that it’s too late and, well, you’re screwed. But luckily that’s not the case. Assuming that you’re making above the minimum wage and earning a decent paycheck (and that you’re not waist deep in debt trying to stay afloat on minimum wage) there are a number of ways that you can start saving for retirement now that will get you to the point of being able to retire by the time you’re in your early to mid to late-60’s. Yes, the fact that you’re off to a very late start makes things a bit more challenging but if you’re keen on learning what your options are keep reading and we’ll tell you. Enjoy.
If you’re reading this and the 2013 April 15th tax deadline hasn’t passed yet then the 1st thing that you should do is contact a mutual fund company (find one online) and fund an IRA for the 2012 tax year. That’s $5000.00 and, if you’re already over 50, it means that you can put in an additional $1000.00. If you can’t afford to put the entire amount into an IRA right now put as much as you possibly can because it will all count later when you need it. We believe that the traditional IRA is better than the Roth IRA for your situation as the benefit will be tax-free money when you need it.
This is almost a moot point however as the main task that needs to be accomplished is simply that you have an IRA of any type. Indeed, if you decide to change to a Roth IRA later you can always convert some or all of the money in your traditional IRA so don’t sweat it just get your IRA soon. Like yesterday.
If you were in your 30’s we’d then give you advice about how to invest your IRA funds but, since you’re not, we think that a simple ‘target-date’ retirement fund is going to be your best bet. If you have a moment search online for Money magazine’s list of recommended funds (They have a ‘Top 70’). Pick one and be done. When you hit retirement the nicely diversified portfolio that they put together for you should do just fine. It’s conservative but has a good ROI and lower risk.
Your next task is similar to the 1st but is probably more important; start contributing to your 2013 IRA right now. 2013’s max is $5500.00 plus that $10000.00 if you’re 50+. If you start now you’ll have money in their by year’s end. Even if you can’t put a lot towards it put as much as you can and make up the difference when (and as often) you can. Many people put this off thinking that the money will somehow appear at the end of the year. That’s how they end up almost 50 with no retirement savings. Ahem.
Your next task is simple but vital. Come back soon for Part 2. See you then, and get to work on that IRA!