Rutgers New Jersey Agricultural Experiment Station [Later Life Farming]

Module 5c: Guidebook to Help Late Savers Prepare For Retirement

There are several types of late savers who are trying to make up for lost time:

  • Procrastinators with little or no past and current retirement savings
  • People who are currently saving for retirement but got a late start
  • People who saved/invested previously and lost some of their retirement savings

The good news is that it's not too late to take action to secure your future. Even workers in their 50s and 60s can accumulate meaningful sums. Remember that your investment time horizon is the rest of your life...not your retirement date. This means that, if you are 45 years old today and live to age 90, you have 45 years for your money to grow through the power of compound interest. Long time frames may also reduce market volatility.

If there was ever a good time to be a late saver, this is it. Thanks to the 2001 tax law, workers have more opportunities to save for retirement in tax-advantaged accounts than ever before. Increased retirement plan contribution amounts, coupled with extra "catch-up" savings for those age 50 and over and the power of compound interest, can greatly enhance a late saver's future financial security. Other tax law incentives are the tax credit (of up to 50% of the amount contributed) for retirement contributions by lower income workers and generous contribution limits for SIMPLE, SEP, and Keogh plans for self-employed persons.

A helpful resource for late savers is the Guidebook to Help Late Savers Prepare for Retirement developed by the National Endowment for Financial Education (NEFE). This 50-page publication describes over a dozen specific strategies that older workers can use to make up for lost time. Some of the strategies involve taking action to increase retirement savings while others involve decreasing retirement living costs. The publication also includes a list of resources and worksheets for users to develop a personal retirement catch-up action plan.

Online Resource


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