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Late Start Retirement Planning

By: Elizabeth Grace - Updated: 8 Oct 2012 | comments*Discuss
Saving For Retirement Retirement

Financial planners would advise young workers to begin saving for retirement soon after collecting their very first payslips. Few kids think that far ahead and within a short span of time, many have begun families and their funds are often spoken for even before they are earned.

Life tends to move along pretty fast and before those young employees realise it, they are approaching middle age and finally starting to consider their retirement. While late start retirement planning requires a greater level of dedication than long term strategies, those in midlife can still enjoy a great retirement if they begin to plan immediately.

Crunch the Numbers

In order to formulate a plan of action, those in midlife need to get clear pictures of where they are now. Tallying assets and then subtracting liabilities provides net worth, but more information than that is needed. It’s important to separate short and long term liabilities, adding them up in two columns and then making a commitment to pay down liabilities in as short a time frame as possible.

Examples of short term liabilities are credit card debt, car payments, and personal loans. For most people, the mortgage on their house is their only long term debt, but some people may have others.

Describe Your Vision

Retirement means different things to different people. Some just want to stop working while others have long lists of things that they want to do and places they want to go after they’ve put their working years behind them. By midlife, most people have a fairly good idea of what an ideal retirement means to them, which is a good thing since knowing what you want is essential to planning for it.

While it may sound silly, it can be helpful for middle aged people to sit down and write all of the elements that are a part of their personal “dream” retirement – everything, from the smallest to the most grand. Sleeping late, spending time with family, learning to play the piano, travelling, fishing, living on a lake, tending a garden, writing a novel, or baking oodles of cookies may be some of the things that people can see themselves doing in their retirement years. Each person’s list will be uniquely theirs, just as individual as the people themselves.

Seek Sound Advice

Once prospective retirees have a clear picture of where they are now and where they hope to be, they can make decisions about how to achieve their goals. Consulting with a financial planner is wise, especially since postponing retirement planning until midlife means that there is a shorter span of time in which to be ready than if planning had begun earlier.

Financial counselling may be helpful for those who have a large amount of debt to consider, since paying off credit card debt and other short term loans along with embarking on an aggressive savings plan are likely necessary before retirement. Financial planners can help midlife workers to assess how much income/savings they’ll need after they retire in order to live as they hope, and then can structure plans for saving and investing in order to accumulate sufficient funds to make that dream retirement a reality.

Make the Commitment

All the planning in the world cannot make up for action, though, so those in midlife who are planning for retirement need to be fully committed to following through with their savings and debt reduction strategies. For most, saving for the future will entail a bit of sacrifice in the present. Most people have at least some disposable income and unfortunately, many are in the habit of spending, rather than saving all of their money that is not earmarked for basic necessities.

Keeping track of all expenditures, from the sizable ones such as mortgage and car payments to the everyday cost of snacks and newspapers, can give an accurate picture of just where money is going each month. Many people are surprised to find that they spend quite a lot on things that don’t really give them all that much satisfaction, and learning to do without little extras can add up to big money over time, and for those who hope to live well after retirement, looking to the future may be motivation enough.

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