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It’s Never Too Late to Invest for Retirement

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While we’ve made our share of financial mistakes, I’m always amazed when I run across someone my age or older who has nothing saved for retirement. Considering that a third of workers have less than $1,000 saved for the future, I guess it shouldn’t be that surprising. The good news is that it’s never too late to invest for retirement. Even if you might never be a millionaire, that doesn’t mean all hope of a decent retirement is out of reach.

Figure Our How Much You Need to Live On

Determining how much money you need to retire is certainly a million dollar question. Most retirement calculators assume  you’ll need 70-80 percent of your current income and won’t let you add savings rates greater than 20-25 percent. My favorite retirement calculator is the one from Personal Capital. At least it lets you add and subtract variables more easily than the rest I’ve tried.

You can actually get a ballpark on your own by determining how much you spend per year now and apply that to retirement years. Some costs like health care will likely increase while others, like clothing and transportation, should decrease. If you have kids, hopefully those expenses will be gone or at least lower in retirement as well.

Use Social Security as a Supplement

Now that you have a number in mind, figure how much Social Security will contribute to your retirement picture. If you’re over 40, the chance of the government stopping social security altogether for you is pretty slim. I’m not so sure how it will be for our kids, but I think we should get all or at least a portion of what Uncle Sam has promised. It’s better to not count on Social Security, but if you’re behind or have nothing, it can be a lifeline.

By logging into socialsecurity.gov, you can determine your estimated monthly benefit. The average is $1,335 per month.  It would be pretty meager if this were the sole source of income for retirement, but it’s a great start. Let’s say you will need $3,000 a month total in retirement. This means you’ll only need to come up with another $1,665 each month, and there are several ways to do that.

How Much Do I Have to Invest for Retirement?

Of course there are a million variables but to simplify, let’s look at a couple of calculators. According to Vanguard’s Retirement Tool, to withdraw $1,700 a month for 20 years, you’d need a starting retirement balance of around $425,000. While that seems like a ton of money for someone who has never saved a dime, it’s probably not as bad as you think.

Using Bankrate’s Investment Calculator, a 40 year old would need to save $461 a month at an average of seven percent interest to have just over $425,000 by age 67 when full Social Security benefits kick in. You can use both of those calculators to plug in your own numbers. I picked age 40 because around this age is when many of us have a “Come to Jesus” moment about finances.

Cut Expenses to Start Saving Now

If you’re middle age or older with nothing saved for retirement, you have to start now. The longer you wait, the more you’ll have to save each month. That means making some tough decisions about money priorities. If there was an excess, you’d likely be contributing already.

Keep in mind some of these average monthly expenses most people deem necessary:

Car Payment: $483

Eating Out: $232

Entertainment: $227

Other ideas to keep in mind:

  • The top 3 banks all collected more than a billion dollars in fees last year.
  • third of parents still support adult children financially.
  • Smokers spend about $280 a month on cigarettes.
  • Average families pay almost $555 per month in credit card interest alone!

What if you could cut or lower one or more of those expenses? Is having a new car, cable, or dinner at Applebee’s worth a miserly retirement?

Ramp Up Earnings

For years we had all the above expenses and did little to invest for retirement. It was foreign to think about driving an older car, trading ESPN for Netflix, or meal planning. In reality,  it’s not that big of a deal. Our quality of life has not suffered at all since trimming the fat from our expenses. I’d say it has improved tremendously now that we don’t have to worry so much about saving so little.

While it’s fairly easy to find investment money when you have little debt and decent income, it’s much harder if you are struggling with one or both of those problems. If that’s the case, it’s time to bring in more money.

For those over 40, unless you had kids late in life, this is the perfect time to ramp up income. Your kids are likely in school and more independent, which frees up time for earning. Whether you end up taking on more hours or responsibilities in your current job or seek out a side hustle, there are lots of ways to earn more money.

Extra Money Is Worthless if You Spend it Foolishly

Remember that extra money isn’t really helpful if you don’t use it wisely. Either contribute more to you 401(k) through your job or use one of these self employment options if you don’t have a work plan.

No it isn’t fun to work harder and you will be tired, frustrated, and sometimes feel like saying “woe is me,” but it’s never too late to invest for retirement. Maybe you won’t be able to retire early or purchase that second home on the beach, but if you take steps now, at least you won’t be subsisting on government cheese or worse, depending on your children or other relatives to support you because you never saved.

Are you on track for retirement or is your head in the sand? Why can’t people make retirement savings a priority?



About Kim Parr

Kim Parr is a private practice optometrist, freelance writer, and personal financial blogger. You can follow her journey to 20/20 financial vision at Eyes on the Dollar.


  1. Short of something catastrophic happening, we should be able to retire very early. I have no idea why people don’t make it more of a priority, but I know why I do. I spent seven years in the funeral industry. During that time, I watched exactly what happens when people don’t save and plan ahead. I dealt with old people living on fixed incomes every day – 75-year-olds working full-time jobs, people living with their adult children, people dying absolutely broke after a lifetime of work. No thank you.

    • Aside from a health crisis or death of a loved one, the worst thing I can imagine is working my whole life and having nothing to show for it.

  2. I think it comes down to a number of things really – usually either ignorance or thinking they’ll take care of it when the time comes. Ultimately, both really go back to an unwillingness to have a long-term mindset and not realizing things can change in an instant. When I was in the brokerage industry it was amazing to see the things people say they couldn’t live without, yet they’d complain about not having anything to save in the next breath.

  3. We’re not on track. I’m a little bit younger, but the husband will be approaching 40 in a few years. For us, for a long time it was the fact that we didn’t make enough to cover day to day expenses, even though we were pretty darn frugal. We’ve been ramping it up since we’ve been able to bring the income up, though. Looking at the numbers in this post, we may be more on track than I thought. Encouraging!

    • That’s whey I hate calculators that say you need $2 million to retire. Most people need less than they think and it’s easily achievable if you get started and stick to a plan. Congrats on the extra income. There are lots of people who don’t get paid much at their regular job, but there are tons of way to supplement if you are motivated enough.

  4. I’m curious how many have given up on retirement. There seem to be more and more elderly (70+) in the workforce these days, and it definitely seems like it’s out of necessity. I can only imagine how discouraging it is to hear about 30- and 40-somethings hitting their “early retirement.”

    • I think it happens very often. I guess those healthy enough to work are actually lucky. If you aren’t able, then you get social security. Better than nothing but not very lush. However, my neighbors are both in their early 70’s, have no debt and plenty of money, yet one just retired a few months ago and the other is still working because she wants to.

  5. I think that one reason people panic at the low amounts is that they forget how many expenses won’t (or shouldn’t) be there anymore. They probably won’t have a mortgage, especially if they’re diligent about extra payments. That frees up a chunk each month.

    And if they’re not working, there’s less wear and tear on the car, which means they shouldn’t have to replace their car as often.

    All in all, this post made me feel a lot better about how woefully behind (comparatively) we are at age 37. Based on last year’s income, SSA has my benefits around $2k at age 67, which is about twice what I was expecting.

    And while I definitely want to ramp up savings as soon as Tim wins his disability appeal, it sounds like we’re not quite so behind in our monthly payment into the IRA. It’s just that I want to open and max out a SEP as soon as we have Tim’s monthly check back in hand.

    Once we can fully fund the SEP and an IRA for Tim, then we’ll really focus on paying down the mortgage. Then saving for and getting a rental property. Because it’s all about passive income, baby!

    • I think for those of us who read lots of financial blogs, we do tend to feel really behind after seeing people retire in their 30’s. Realistically, most people won’t retire that early and many have no desire to. It really only takes 25 or so years of reasonable savings to retire comfortably. So even if you start at 40 and work until 65, that certainly isn’t the end of the world.

  6. People nowadays start taking care of their retirement when they hit mid 30s just like my colleagues who find ways to increase it. I just hope that they start earlier just like me. I started at the age of 28 years, though it’s a bit late. But, I am glad I started earlier than them.

  7. I’m currently at the stage in which we are comfortable paying our expenses and setting some aside to “pay ourselves first”, but we aren’t all the way there yet. I feel like I’m currently on track for “normal retirement” and you’re right – for those of us that read a lot of information about personal finance, normal can feel like failing!

    It’s important to always keep perspective. As you said, there are many expenses that shouldn’t linger into our retirement age and we really probably won’t need AS MUCH as they say we will once social security is thrown into the mix. I take that as motivation to increase savings/investments outside of the retirement accounts in order to at least have a go at retiring earlier!

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