Ideally, most people will have started saving for retirement by age 30 or even earlier.
When you get your first job, you should begin paying into a 401(k) immediately, if your employer offers such a plan. And if your employer matches funds, do your best to max out your plan.
However, it’s not always realistic to expect younger generations to have retirement on their minds, when they might be focused on paying off student loans or saving for a house.
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If you haven’t started saving for retirement, you’re not alone. One recent GOBankingRates survey found that 28% of people have nothing saved for retirement, and 39% aren’t contributing to a retirement fund.
“The statistic that 30% of Americans have $0 saved for retirement is alarming but not surprising,” retirement planning expert Mike Kojonen, founder and owner of Principal Preservation Services, previously told GOBankingRates.
If you’ve reached the age of 40 and still haven’t started saving, you may need to re-think your retirement plan, according to retirement expert Anne Lester, author of “Your Best Financial Life: Save Smart Now for the Future You Want.”
Here are five steps you can take now or in retirement to give yourself the money you need to live a secure life.
Consume Less
If your goal is to retire with $1 million at the age of 65, and you start setting aside $381 per month at age 25 with a 7% return, you can meet that goal. However, if you don’t start saving until age 40, you’d need to save $1,234 per month at the same rate of return, CNBC reported.
Since most people probably don’t have an extra $1,234 sitting around every month, you’ll need to revisit your household budget and find ways to save. While small changes like canceling streaming services can add up, also consider larger items, like cutting grocery bills through meal planning, eating out less frequently and finding free entertainment.
Also look into consolidating high-interest credit card debt to a 0% interest credit card and making a plan to pay it off. You could free up hundreds of dollars in interest charges.
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Travel Less
Cutting out vacations can also free up thousands of dollars a year you can put toward retirement.
If your retirement lifestyle includes travel but you have no savings set aside, you may have to revise these plans to free up the money you may need for healthcare and other costs as you age.
Downsize Your Home
Many people choose to downsize their home in retirement. But if your children have already grown, it might make sense to downsize in your 40s instead.
The real estate market is still hot in many areas. According to the Federal Reserve Bank of St. Louis, the median home price in Q2 2024 was $412,300.
If you downsize to a less expensive dwelling, you can invest the profit from the sale of your home to make a serious dent in your retirement savings goals.
Move Somewhere With a Lower Cost of Living
Whether you move now or wait until retirement, consider regions with a lower cost of living. Of course, unless you can work remotely, you’ll want to weigh the lower cost-of-living with the potential for a lower salary.
If you wait until you retire, you can consider some U.S. cities where you can retire and live on just your Social Security benefits. Anything you save for retirement can provide a buffer, emergency savings, or cash to enjoy your retirement.
Work Longer
If you put off saving for retirement, there’s a possibility you’ll reach your 60s without enough money in the bank to retire comfortably. This could mean staying at your current job or taking on some side gigs to continue funding your retirement.
Even if you haven’t saved a penny toward retirement, you don’t need to give up your retirement dreams entirely. Some lifestyle changes, along with a shift in mindset that your retirement may look different than you expected, can ensure you’ll have enough money to fund your later years.
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This article originally appeared on GOBankingRates.com: Why 40 Is the Age To Pay Attention To With Retirement Planning
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