I’m way behind on retirement savings. What shall I do?

Tanza Loudenback, GVB®

Tanza Loudenback, GVB®

I’m turning 58 this year and don’t know what to do or how to plan for retirement. I’ve only invested a small amount through previous employers and I’m not sure how to save now that I’m self-employed. I’m really worried about my retirement, but I don’t know where to get good, safe help.


You’re not alone – most Americans are behind on retirement savings. Good to hear you have that some money invested in the pension plans of previous employers, but there is much more you can and quite frankly should do. Let’s look at some of your options.

A financial advisor can assess your financial situation and help you create a plan for a secure retirement. Find a financial advisor today.

Playing Catch-Up: The Moves You Can Make

You are so close to retirement age that the best financial moves will be specific and deliberate, from how much you invest to what accounts you use to do it. You should also plan for health care costs and taxes, and reduce or eliminate debt where possible.

Here are several ways you can boost your nest egg and any retirement income:

  • Maximize your 401(k) and IRA and add catch-up contributions if possible.

  • Consider deferring Social Security benefits until age 70 to maximize your eventual benefit.

  • Keep working until you are 60. The more you can extend your earning years and delay your withdrawal years, the better.

  • Move somewhere with a lower cost of living, downsize your home, or limit your discretionary spending.

  • Take advantage of tax deductions for the self-employed, such as writing off business expenses.

  • Use tax-advantaged self-employed retirement accounts, such as a SEP IRA or Solo 401(k), that have high annual contribution limits.

Depending on your personal situation, some or all of these tactics may be appropriate.

Get help from a financial planner

The best way to manage all of these priorities is to meet with a financial advisor. Since you need financial planning services, it’s best to find someone who is a certified financial planner (CFP). Many of these professionals live to help people navigate tough financial situations like the one you’re in.

But it sounds like you’re a little overwhelmed when it comes to finding someone you can trust. It’s normal to be skeptical. Money is an emotionally charged subject; for many it can feel embarrassing or wrong to talk about it openly. The right financial planner will guide you through the process with compassion and understanding – and with an appropriate sense of urgency.

Here’s my advice for finding a financial planner: limit your search to those that are “pay only.” This means that they are only compensated by the fee their customers pay them, and they do not receive kickbacks or commissions for selling certain financial products. (Someone who receives such commissions is often referred to as having a fee-based compensation structure.) You’re in a vulnerable position as someone in their late 50s with no retirement plan, so you probably don’t want to end up with an advisor trying to make money. earn by selling you a particular annuity or investment product.

What you really need right now is someone to help you set your goals and create an action plan. You need someone who can evaluate your current financial situation, identify any gaps and make specific, actionable recommendations.

But of course this is not free.

The median cost for project-based financial planning services, such as developing a retirement plan, is about $2,500. I realize that is not small change for most people. But don’t think of the fee as a sunk cost, think of it as an investment. If a financial planner can help you set aside at least an additional $2,500 for retirement, the plan will have paid for itself. They will definitely help you do a lot more.

Tips for a safe retirement

  • Finding a qualified financial advisor doesn’t have to be difficult. SmartAsset’s free tool pairs you with up to three financial advisors serving your area, and you can interview your advisor matches for free to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

  • Wondering where you stand with retirement savings? Use our retirement calculator to see how you compare to your retirement income needs.

Tanza Loudenback, CFP® is SmartAsset’s financial planning columnist, answering reader questions on personal financial topics. Do you have a question you would like answered? Send an email to AskAnAdvisor@smartasset.com and your question may be answered in a future column.

Please note that Tanza is not a participant in the SmartAdvisor Match platform.

The message Ask an advisor: I am far behind with pension savings. What shall I do? appeared first on SmartAsset Blog.

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