Retiring in 50s Never Too Late to Start

Is fifty too late to start saving for retirement? In a shaky economy and insecure employment situation, more and more people are asking that question. The good news is it is never too late to start. Here are four tips to help you through the process:

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1) Make use of catch-up contributions to 401k's and IRA's. The IRS has created a distinctive "catch-up contribution" to help savers as they approach retirement. If you are over 50, you can contribute $6,500 to an IRA and $22,000 to a 401k every year. These savings plans are tax-deferred, so you avoid paying taxes on your investment growth until you withdraw money from the plan. Try to contribute as much as possible to these plans. Also, check with your employer to know the details.

2) Consider whether to use a financial adviser or go it alone. An adviser can be helpful, especially with financial planning and investment selection. However, a consultant does provide a service, and that service costs money. Right now you need to save perhaps every dollar. If the services don't justify the fees, it may be best to handle saving on your own. The good news is that most trustworthy online brokers have tools to help you distribute your money. Spending even a few hours learning the basics of asset allocation could spare you thousands in unnecessary adviser fees over the long run.

3) Review your life insurance. Life insurance won't help you save money, but it could prevent a disaster down the road. Many retirees spend most of their savings on things like medical treatment, extended nursing care, and in-home services. For married couples, a terrible end-of-life battle could deplete the retirement savings for the surviving spouse. If you are still strong, your 50's could be your last opportunity to buy life insurance at an affordable price.

4) Check out term deposit rates. Term deposits operate much like traditional bank deposits. The main difference is that, in a term deposit, the money is "locked up" for a predetermined term. The deposit cannot be withdrawn until the term is over, similar to a CD. Since the bank knows the deposit will be on hand for a set amount of time, they are usually willing to pay a higher term deposit rate than they pay on traditional bank deposits. If you don't need immediate liquidity, this could be an attractive way to earn more interest.

Author: Angela Prickette