Navigating retirement planning: A 7-step guide for late starters 

Couple talking about retirement planning while cooking.

Retirement is a significant milestone in life, representing the culmination of years of hard work and dedication. However, for those who find themselves approaching retirement with insufficient savings, the path can appear daunting.  

Fidelity advises retirees to save 10 times their preretirement income by the time they’re 67 years old. According to the Bureau of Labor Statistics, the average annual earnings of someone 55 years and older was $60,632, as of July 2023.  

Considering this, a new 67-year-old retiree should have at least $606,320 saved, yet a recent survey of 2,000 Americans from investment firm Schroders revealed working Americans ages 45 and older believe it will take $1.1 million in savings to retire comfortably, yet 59% expect to have less than $500,000 saved. 

With estimates like this, staying on track could be difficult. Fidelity suggests breaking the savings goal up into age-based milestones: Aim to save at least 1x your yearly income by age 30, 3x by 40, 6x by 50, and 8x by 60. 

Whether this news is daunting or comforting, fret not. The good news is that it’s never too late to start planning for a more secure retirement. In this guide, we’ll walk you through the steps to navigate retirement planning as a late starter and introduce you to a powerful tool that can help bridge the gap: Save Market Trust. 

Assess your current financial situation 

The first step in any retirement plan is to understand where you currently stand financially. Take stock of your savings, investments, and any other assets. This will give you a clear picture of your starting point and help you set realistic goals. 

Define your retirement lifestyle 

To determine how much to save, you must know how much you need to live in retirement. Therefore, what do you envision for your retirement and where do you want to retire? First, define your retirement lifestyle, whether it’s traveling, pursuing hobbies, or simply enjoying more time with loved ones.  

Then, determine where you’d like to live in retirement. The cost of living where you plan to retire comes into play. GOBankingRates estimates you’ll need more than $1.8 million to retire in Hawaii, which is the most expensive state to retire in, versus $505,346 to retire in the cheapest US state, Mississippi. Knowing your goals will help you determine how much you need to save and your timeline. 

Create a budget… Or two 

You need two budgets; 1. Your current budget with how much you’re saving for retirement; and 2. One budget that you’ll live on when you actually retire.  

For your current budget, calculate how much you can save monthly and stick with it. The sooner you start and more consistent you remain, the better you’ll be when you reach retirement age.  

For your future retirement budget, consider your expected sources of income during retirement, such as Social Security, pension, or part-time work. Then calculate your monthly expenses to ensure your budget is sustainable. When doing this, don’t forget to keep inflation in mind. For example, online calculators that pull data from the Bureau of Labor Statistics’ Consumer Price Index estimate $5 in 2023 has equivalent in purchasing power to about $8.26 in 2040, assuming the dollar had an average inflation rate of 3.00% between 2023 and 2040.  

Maximize retirement contribution 

If you’re late to the retirement savings party, you should maximize your contributions to retirement accounts. As of 2023, new maximums to 401ks went up to $22,500 for pretax and Roth employee contributions, with an increased $7,500 catch-up contributions for individuals 50 years old and up. 

If you’re not late for saving for your retirement, Fidelity advises you save at least 15% of your income each year, including employer contributions, for retirement. 

Explore investment opportunities 

While time may be limited, investing can still play a crucial role in boosting your retirement savings. Diversify your investment portfolio to manage risk and maximize returns. Consider low-cost index funds or exchange-traded funds (ETFs) that offer broad market exposure.  

If risking your money in the market doesn’t suit you, consider lower-risk programs like Save Market Savings, which invests on your behalf while your principal is securely kept in an FDIC-insured account.† The variable APY* with Market Savings is 8.27% for a one-year term and 9.49% variable APY* for a five-year term, as of September 2023.  

When you deposit into a Market Savings term, your principal deposit is kept in an FDIC-insured,† non-interest-bearing account. Meanwhile, Save creates an investment account for you and makes equivalent portfolio investments on your behalf. What we mean by equivalent portfolio investments is essentially taking the economic value of your deposits and purchasing an equivalent investment on your behalf. Any equivalent investment is funded by Save partner banks, not from customer deposit accounts, and there is no requirement for customer outlay of their own capital. 

Nearing retirement? Incorporate Save Market Trust 

Save Market Trust combines the potential for growth with principal protection based on a five-year term4, making it a wise choice for those with limited time before retirement. As of September 2023, the 5-year variable APY** for Market Trust is 13.82%. 

How Market Trust works: 

  1. After you’re approved for a Market Trust program, Save opens an investment account at Apex Clearing (SIPC insured) and sets up a Trust. 
  1. Then, based on your investment profile, Save allocates investments to your program. The allocations guarantee your principal and provide market upside. Your program will mature after five years. 
  1. Daily, you will be able to see your program performance by logging into your Save app. 
  1. After five years, when the investment program matures, the net returns are paid out in cash or participants can elect to renew the program for an additional 5-year term based on availability.  

Additionally, your market investment portfolio can be liquidated, and its cash value can be withdrawn at any time during the five-year term. 

Stay committed to your retirement savings goals 

Saving for retirement is a journey that requires dedication and taking it one step at a time.  

While starting late on your retirement savings plan presents its challenges, it’s entirely possible to secure a comfortable retirement. By following these steps and leveraging tools like Save Market Trust, you could bridge the gap toward a fulfilling retirement that aligns with your goals. 

Remember, it’s never too late to take control of your retirement future. Start today and set yourself on the path to a secure and fulfilling retirement. 


Leave a Reply

Filter By Category: Investing
%d bloggers like this: