Catching Up: How to Invest for Retirement Late in the Game

You might be on the edge of despair if you have discovered that you are short when it comes to retirement savings. However, the important thing is to start saving for retirment NOW, even if you do feel that you are late in the game. There might be some ways to catch up on your retirement account with a little planning.

Catch up contributions

First of all, realize that the government allows catch up contributions for your retirement account if you are over 50. For the IRA, you can put in an extra $1,000 a year, and for the 401(k), you can actually put in an extra $5,000 per year. The best thing you can do for yourself is to arrange your personal finances so that you can put in as close to the available catch up contributions as possible. If you have a non-working spouse that does not have a retirement account, you can open a spousal IRA and contribute the max toward that, effectively doubling your IRA investments.

Consider other retirement planning options

There are other retirement planning options available as well. Have you built up equity in your home? Many people near retirement age find that their homes are nearly paid off. Put as much as you can toward the principal of your home (after the max in your retirement savings, though!) to build the equity. Then when you are ready to retire, you can get a reverse mortgage to help you pay the bills. This is a rather convenient type of home equity loan where you receive payments for the value of your home.

Another option is to consider part-time work, at least for the first couple of years of retirement. It can help ease you into retirement, and help you adjust your spending down to a different level. And it will give you something that you can do. Many retirees are finding that part-time jobs are rather fulfilling. This is especially appealing to retirees who have spouses that are not at retirement age yet.