Most Americans don’t think about planning for retirement until their late 40s. By that time, building a sizable nest egg gets tougher. There are still some steps that will help, though:
- advantage of the additional “catch-up” provisions that are available.
- Open a Roth IRA. If you’re ineligible, fund a traditional IRA even if it’s not tax-deductible. Either way, there are catch-up provisions for those over age 50.
- Save extra money in taxable accounts. A low-cost, no-load variable annuity might make sense because investment earnings are tax-deferred.
- Postpone retirement by a few years. By retiring later, you can build a bigger retirement portfolio and shorten the amount of time you’ll need income. In addition, you can increase your Social Security benefit by working longer, up to age 70.
Alternatively, you can semi-retire and supplement your retirement income by working part-time.
As a rule, you shouldn’t retire until your portfolio is 25 times as large as your spending needs. If you think you’ll need $30,000 per year, in addition to Social Security and pension income, you should accumulate $750,000 worth of investments.
