How to boost your retirement savings in your 50s
Last updated on 5th December, 2018 at 02:44 pm
You haven’t saved enough for your golden years. Life has had ups and downs, your kids’ education cost a ton, there were debts to settle, a home to pay off… Suddenly, you’re in your 50s. Don’t despair, it’s not too late.
We’ve heard it a thousand times: the sooner you start saving for retirement the better off you’ll be in your old age. And now you’re in your 50s. Everything is running smoothly – your children have flown the coop, your bond is paid off and life would be excellent if it weren’t for your retirement savings. You know you haven’t accumulated nearly enough to ensure stress-free golden years. In fact, you’re running out of time and fear it’s too late to fix the damage. What can you do to quickly catch up on your savings and make up for lost time? Although you may have to stretch your limits, you can still make a plan to save enough or at least to make a considerable difference. “For people in their 50s, retirement planning should be a matter of urgency. If you’re like most people, you probably need to play catch-up to ensure sufficient retirement funds. A financial adviser should help to give you a clearer idea of how much you need to save at this point in your life,” says Karin Muller, Head of Sanlam Growth Market Solutions.
Ready, steady, go!
When time is not on your side, you have to take immediate action, says Muller. If this is you, she suggests the following:
- Make wise investment decisions. One of the big mistakes people make is to invest too conservatively, they are too careful and may miss out on good investment growth because of it. A financial adviser can assist to ensure you make the right investment decisions.
- Preserve your retirement savings if you change jobs. Even in your 50s, you may still be moving up the professional ladder. If so, you need to be acutely aware of the importance of preserving your retirement savings when you change jobs. Don’t be tempted to use your savings for anything other than retirement.
- Be aware of the tax benefits of investing in a retirement annuity. Retirement annuities offer excellent savings opportunities. Explore this option by speaking to a qualified financial adviser.
At retirement, you’ll have to make certain decisions that will affect your retirement position in one way or another, says Muller. Depending on your retirement fund you may be allowed to take all your money in cash or only one third in cash. Sanlam’s latest Retirement Benchmark Survey shows that many retirees deplete their savings over just 2.42 years! Since retirement savings are meant to provide for your needs for the rest of your life, it’s particularly important to think carefully about how much money to take in cash. “Another critical decision is to choose the right type of retirement income product, as this may determine how your retirement income will grow over time, or not,” says Muller. Again, discuss this with a financial adviser. The best way of boosting your limited retirement funds is to work and save as long as you possibly can. However, companies have rules and it’s not always possible to delay your retirement. At a certain age you’ll have to leave.
Stretch your savings
For many people who are about to retire, continuing to generate an income is a necessity. The good news is that there are ways to make your retirement savings last longer. Here are a few options to consider:
- Change careers. If not a full-time job, consider starting a part-time business from home or renting out that spare room or granny flat.
- Pay off any debt you have now. This includes any outstanding debt on your home loan. You don’t need that kind of extra money burden draining your resources in retirement.
- Rethink your housing situation. What does it cost you to stay on in your current home? Would moving to a smaller home with lower maintenance costs make a difference; even moving to a cheaper neighbourhood or town?
- Reduce your expenses. Be honest about your spending habits. Stick to a carefully considered budget and cut costs.
Do whatever it takes. Be determined and don’t lose faith. Every little bit you save counts and can grow over time to secure a solid nest egg so that you can enjoy a comfortable retirement. It’s never too late to make a difference – unless you think it is.
By Helen Ueckermann
Find out more about Sanlam’s retirement savings solutions – click here.
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