By Paul Sisolak
John Lennon once sang, on the cusp of middle age, “Life is what happens to you while you’re busy making other plans”, a familiar tune for anyone nearing the big 4-0 who’s been trying to save money for retirement.
Things always seem to get in the way of important savings goals, whether it’s hard times, debt, the kids’ tuition or even simple procrastination.
If this sounds like you, you’re not alone. According to the Employee Benefit Research Institute, 1 in 3 workers between the ages of 35 and 44 have less than $1,000 saved for retirement. What’s more, only a little over half (53 percent) of all American workers participate in a retirement plan at work, according to 2014 data from the Bureau of Labor Statistics.
With retirement planning, time is of the essence, but it’s not too late to start saving if you’re far behind. There are a lot of simple ways to build your retirement fund in your 40s and finish with a nice nest egg. Read on for five steps to overhaul your retirement plan.
DETERMINE YOUR RETIREMENT NUMBER
Opinions vary on how much money is needed to retire comfortably, some experts argue that you should be shooting for eight times your ending salary, while others say you should be building toward $1 million. In reality, your retirement savings are very particular to you, so there’s not really a one-size-fits-all approach. What’s most important is that you determine the exact amount that you’ll be saving for, so there’s no guesswork; then you can start building your plan around that number.
START INCREMENTALLY INCREASING YOUR SAVINGS
Generally, experts recommend that you save between 10 and 15 percent of your yearly income for retirement, but that might not actually be enough, especially if you’re getting a late start. Start upping the ante: See if you can start socking away 20 percent from your paycheck alone. If the added financial discipline is hard to muster, set up an external savings account and have a portion of your paycheck automatically deposited there. To increase the amount you take home each month, and make your income stretch further, check out these ways to double your paycheck.