How Do I Start Saving For Retirement If I’m 45?

If you're 45, you can still save for retirement.
At 45, you can still save for retirement.

If you’re 45 and haven’t begun saving for retirement yet, know that you’ve got some major work cut out for you. But, also, know that you’re not alone; though it’s not ideal, plenty of people haven’t saved a penny for retirement at your age. In fact, according to CNBC, the median retirement savings for those between 32 and 61 years old is $5,000.

Unfortunately, the longer you continue to put off putting money in your retirement fund, the less time you allow compound interest–interest on your interest–to work its magic. Compound interest makes your retirement fund grow exponentially, meaning that earlier you start, the faster your fund will grow.

It’s never too late to save for retirement

No matter your situation, it’s never too late to make a plan and starting funding your retirement. So: How do you get started? Well, by setting aside as much as you reasonably can. Though you shouldn’t get too hung up on a specific number,  it may be handy to use an online retirement calculator to figure out just how much you’ll need to save in the next couple of decades.

At this point, you should be putting aside as much as you can into your 401(k) contribution each year from here on out. In 2018, the most you can contribute is $18,500. Most employers will also match your contributions up to a certain percentage.

Open an IRA

If you qualify, in addition to your 401(k), you should also open a Roth IRA. You put after-tax dollars into a Roth, meaning when you withdraw, you won’t have to pay taxes on the money. As of 2018, you can contribute up to $5,500 per year into a Roth, and you should certainly be trying to reach that maximum contribution, too.

If you haven’t begun saving for retirement by 45, you will likely need to change your savings habits to reach your retirement goals. You may also consider picking up a part-time job after you retire to boost your income, or scale back what you want your retirement to look like.

You can catch up your retirement fund

And, don’t forget: Once you hit 50, the IRS will allow you to contribute “catch-up contributions” each year to your 401(k) and Roth IRA, meaning you will be able to boost your contributions in just five years! For now, and moving forward, it’s better too late than never.

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Published by

Tom S.

Tom is a 2006 graduate of UW Madison, currently residing in Verona with his wife and 2 girls. He has been passionate about writing ever since he was 15 years old, and displays that same enthusiasm in his work today. When he’s not sharing insightful financial wisdom, you can find Tom chilling on the Union Terrace, enjoying craft beer at the Great Dane, or hiking at Governor Nelson State Park. In the Fall he loves to take his family to Badger Football games!