Congratulations, you’re 50 years old! You made it to the half-century mark and it’s time to throw a big, honking birthday party. But do it quick, before your financial advisor yanks away the punch bowl and adds a trio of not-so-fun items to your bucket list.
“The three things people need to do if hoping to retire in 15 years are save, save and save,” says Mark J. Snyder, a financial services professional based in Medford, New York. “And if your savings are very low, you may need to consider postponing retirement one to three more years – or taking an additional job and banking all of that extra income into your retirement fund.”
So much for buying a Harley and taking a six-month road trip. Because if you’re one of the many whose IRAs got wiped out during the Great Recession, or you simply kicked the retirement savings can down the road, you’ve got very little time to catch up.
That’s right: 15 years is a blip on the retirement investment radar.
Worse yet, many will join the ranks of today’s 50-year-olds with nothing pretty in the retirement kitty. Recent government statistics reveal that just 53 percent of the civilian workforce participates in or contributes to a retirement plan, according to the U.S. Bureau of Labor Statistics. And in the private industry subset, it’s even lower, at 48 percent.
Among the two major categories in the civilian workforce surveyed, only one – state and local government workers, at 81 percent – shows healthy participation rates.
Catching up isn’t a lost cause, so long as pre-retirees make a host of strategic commitments, experts say. But those will differ drastically from person to person and couple to couple.
“Everyone’s needs and goals are different,” says Maria Romano, senior vice president and regional manager with The Provident Bank in Freehold, New Jersey. “At age 50, some adults have children in college, so tuition comes into play – whereas others have passed the hurdle of secondary education and are looking closer at retirement.”
Another crucial factor involves segregating needs from wants – in fact, there’s no way around it.
“Your needs will include all day-to-day living expenses such as housing, utilities, food, transportation and out-of-pocket medical expenses,” says James Nichols, head of the customer solutions group at Voya Financial in Windsor, Connecticut. “Your wants will be ‘fun expenses’ such as travel, vacation and social activities – or discretionary items such as cars, recreational vehicles, second homes and other consumer goods.”