6 steps to retirement savings (when you’re older than 39)


Wait. When did I turn 40? I swear to you, I was 23 just a few years ago. Ok, maybe more than just a few years ago, but not that long ago.

Now I’m 40, and that’s a whole lot more than a number. What happens if you wake up one day and your driver’s license says you’re 40, but your retirement savings says you should be 23?

First, look at the good instead of focusing on the bad. There are probably a lot of reasons why you don’t have the most robust retirement savings at 40. Student loans, business investments, and other plans may have taken financial priority over retirement for you. But those plans also show accomplishments, and you can’t let a lack of savings cloud those achievements.

Now it’s time to look your 40-year-old self in the mirror and take a few steps to a more fully funded retirement.

  1. Get out the calculator. The first step is figuring out how much money you need to save for retirement. Calculate your guaranteed income from Social Security, retirement accounts, pensions and other sources.
  2. Painesville Credit Union CEO Lori Guzzi reminds members to take advantage of all company retirement benefits. “Make sure you are aware of any matches your company makes to your retirement so you can get the maximum benefit. Don’t leave free money on the table!” she said.
  3. The Yin to that Yang is expenses. What do you think your basic life expenses will be when you retire? This includes food, housing and utilities, car and gasoline expenses, and health care. This is the time to think frugal: you won’t be eating out every night when you retire. Your retirement should be fun, so be sure to calculate in a few luxuries for future grandchildren, some travel, and hobbies.
  4. Speaking of expenses, it’s time to prioritize. What do you want your retirement to be, realistically? If it includes golf and horseback riding and sand and surf, your retirement is going to be more expensive. If it includes working a small hobby farm and selling crafts on the side, you’ll need less to get by. It’s important to be honest with yourself about what you want so you can work to get it.
  5. Time to get serious about saving. Better late than never, right? Set aside as much as you possibly can for retirement each and every paycheck. You can max out your contributions to your 401(k) to $18,000 a year. That’s a big goal, but we’re getting serious about retirement, remember? If you max out your contributions (good job!), you can always set aside more money in savings accounts.
  6. Even the IRS feels your pain. Once you hit 50 (no over the hill jokes, please) you can make up to $6,000 in annual catch-up contributions to your 401(k), 403(b), SARSEP, or 457(b) plan. You can also make an annual contribution to an IRA of $5,500, but if you are over 50, the IRS lets you add $1,000 more to that account.
  7. If skipping that yearly retirement trip to Paris is more realistic for your golden years, you might reconsider what your retirement really looks like. You can retire from your high-stress career and take a part time position with less responsibility. You can sign up to be a substitute teacher, or a consultant in your career field. You could also add a few years to the end of your career, working beyond your retirement date.

Regardless of how much money you have in your retirement savings, the time to save is always NOW.

We’re always here to help you reach your financial goals! Call us at Painesville Credit Union at 440-352-8974 to set up a financial counseling session to help you reach your perfect retirement.

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Making Life a Little Better is a blog by Painesville Community Credit Union. We're here to help you borrow and save money, plan for your family's future, and find the best chili recipe in Ohio (and maybe the world). Learn more about Painesville Community Credit Union here: www.painesvillecu.org.


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