Read This If You Can’t Possibly Save Enough For Retirement

It’s relatively easy to save for retirement when you’re still
young Five thousand dollars set aside for a new baby grows to
an amount that generates over a $100,000 a year in current-day
dollars if the money earns 12 percent annually and inflation
runs at 3 percent
NOTE: The data is a little sketchy, but small-company stocks
probably deliver average returns of around 12 to 13 percent over
long periods of time Small-company stocks are, however, very
risky over shorter periods of time
The flip side of this is that it becomes difficult to save for
retirement if you start thinking (and saving) late in your
working years If you’re 60, haven’t started saving, and want
$25,000 a year in income from your retirement savings at age 65,
you probably need to contribute annually more than you make
Say you’re in your 50s–or even a bit older With the kids’
college expenses, or perhaps a divorce, you don’t have any money
saved for retirement What should you do? What can you do? This
situation, though unfortunate, doesn’t need to be untenable
There are some things you can do
Just say no
One tactic is not to retire–or at least, not yet After all,
you save for retirement so the earnings from those savings can
replace your salary and wages If you don’t stop working, you
don’t need retirement savings to produce investment income
Note, too, that “not retiring” doesn’t mean you need to keep the
same job If you’ve been selling computers your whole life and
you’re sick of it, do something else Get a job teaching at the
community college (Maybe you’ll get summers off) Join the
Peace Corps and go to South America Get a job in a daycare
center and help shape the future
Give yourself breathing room
A second tactic is to postpone retirement a few extra years,
which, of course, also reduces the number of years you’re
retired Rather than working to age 62 or 65, for example,
working until age 67 or 69–a few more years of contributions
and compound interest income–will make a surprising difference,
and you’ll boost substantially the money you receive from
defined-benefit retirement plans If you’re paying a mortgage,
maybe you can pay that off in those few extra years, too
Redefine your sense of affluence
A third and more unconventional tactic is to decide that less is
more and tune into the art and philosophy of frugality A good
book on this subject is Your Money or Your Life by Joe Dominquez
and Vicki Robin (Viking Penguin, 1992) And if you decide to
live on less while you’re still working, you’ll end up saving a
lot more over the remaining years you work

Tags | breathing, college, compound, computers, dollars, future, investment, result, savings, shorter, stocks, tactic