How to Boost Retirement Savings After Age 50

You know I see it quite frequently. I get you know 50 year olds, 50 to 60 years old come into the office and the big question for them is what can I do now to boost my retirement savings before I retire in a few years? And that’s a great question. And there’s so many different ways that you can boost your retirement savings prior to that magical time that you get to retire. One of those ways and I always start with this one first, is to pay off the household debt that you have. So whether that’s credit card debt or maybe you’ve been working at that mortgage for a number of years and you’re getting close to that. Put those extra funds towards that mortgage as well or whatever that debt may be that you have in your household. Focus on that first. Something can be said for that peace of mind that when you get to retirement, you don’t owe anybody a dime. It’s just great if you don’t have any of that debt. Another option to boost those retirement savings is to maximize your IRA contributions. So if you’re under the age of 50 for 2023, your max IRA contribution is just $6500 annually. But once you hit that magical age of 50, you get $1K catch up contribution, okay? So you can contribute up to $7500 annually. So let’s say you did that from age 50 until you retired at age 65. And let’s assume that you had a 7% growth rate, okay? Through the years obviously those IRA contribution limits will probably increase. But let’s just assume that you have that $7500 that you contribute for 15 years until you retire. With that 7% growth rate, you’d have just under $200K extra saved for retirement. Now what about the 401K? There’s another option there. So you know if you’re under the age of 50, the max 401K contribution is $22,500. But once you hit that 50 age plus, you can contribute even more. So the max in 2023 for a 401K contribution is $30K annually. So let’s take that same scenario, okay? Let say that okay, you’re in your 50s now. You’ve got more disposal income. The kids maybe are out of the house or they’ve graduated college and so forth. So you can stock away that money in that 401K and really max it out. If you did that for 15 years, maxing out that 401K with that same 7% growth rate, you’d have nearly three-quarter of a million dollars saved for retirement. Just by doing that over those last 15 years as you approach retirement. So that’s just a huge way to boost those retirement savings. Another option is well you’ve got enough disposal income that you’ve done the IRA contributions. You’ve maxed out the 401K. You can also contribute to an HSA or a health savings account. Now you’ve got to make sure you’ve got that high deductible health plan, but if you do, that’s just one more way to boost your retirement savings as you get closer to retirement. And then finally, there’s another option, it’s keep working, okay? So you don’t have to retire at age 62 when Social Security starts, right? You could work a few more years. And by doing that you’re actually going to delay Social Security which would then also boost your retirement income, right? You know I find a lot of times where clients, they retire from a job they’ve had for a number of years. And they had that purpose in that job. And then when they retired, they kind of were twiddling their thumbs, but what do I do now, right? And so I have a lot of clients where they go back to work. And they work part-time doing something that they really enjoy and really love to do. So don’t forget about that. That is another option as well to boost those retirement savings. Yes, you can do those through IRA contributions, the 401K contributions, HSA contributions and the like. But you can also work a little bit more or do part-time work enjoying something that you really love to do. All right, well take care. And by all means don’t hesitate to reach out to us with any questions if you want to learn about how you can boost your retirement savings, please don’t hesitate to call the number on the screen.