Web Wealth: Playing catch-up on savings: Is it doable?
Not everyone who puts off retirement saving can make a success of playing catch-up. But for a lot of people, it is doable, with the right advice and a realistic plan. Here are some suggestions.
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Not everyone who puts off retirement saving can make a success of playing catch-up. But for a lot of people, it is doable, with the right advice and a realistic plan. Here are some suggestions.
"The odds are not insurmountable" for a person in their 40s or 50s who has done little or no retirement planning to rally and assemble a livable retirement plan, according to this post at Investopedia.com. Writer Glenn Curtis lists "late-stage retirement catch-up tactic" that include funding retirement savings accounts "to the hilt." Other measures to take, if an underfunded retirement is approaching, may include tapping into the cash value of life insurance policies, and taking out a reverse mortgage or selling a home. Curtis cautions on the home selling: "After all, in many instances, it takes the homeowner 30 years to accumulate full equity ownership in the house. Therefore, it would be a shame not to obtain the largest amount possible from a sale"
If your employer offers a 401(k) retirement savings plan, you get a chance this year to save more than ever in one of these tax-deferred accounts. A chart at 401khelpcenter.com shows the new, higher 401(k) plan contribution limits for 2015. Cost-of-living increases have hiked the standard contribution limit to $18,000 (from last year's $17,500), and increased the "catch-up" contribution for workers over age 50 to $6,000 (from $5,500).
The Internal Revenue Service outlines 2015 contribution limits for IRAs on this page. Among many other things, it notes that even after you reach 701/2 years of age - the age when you can no longer contribute to a traditional IRA - you can still contribute to a Roth IRA. On a Roth IRA, there is no tax break for the initial contribution, but you typically won't pay any taxes on withdrawals. There is also no age limit for making a rollover contribution to a traditional or Roth IRA.
For people 50 and older, "It's crunch time! There's no way around it. The result of a lifetime of money habits will make itself abundantly clear. Your financial future depends now on a candid assessment of how well you've stuck to planning thus far," says this post by Leslie Haggin Geary at Bankrate.com. Start with a realistic assessment of what you'll need to live on in retirement. A big misconception is that you can easily downsize in retirement. "With that in mind, it may be a good idea to seek a little professional guidance to ensure you're setting realistic goals," Geary writes in suggesting that hiring an independent investment adviser. Other suggestions here include making a concerted effort to tackle debt, and to "prepare for the unexpected" by buying long-term-care insurance.