Saving for retirement: How late is too late?

This question is difficult because the solution depends on your earnings and assets, your goals for retirement, and many other factors. Ideally, you should begin saving for retirement in your 20s. More time to save enhances your chances of having the kind of retirement lifestyle you desire.

If you're in your 40s or older and have not saved much (or anything) yet, you may face a challenge in building the retirement fund you need. The shorter your time frame, the less room you have for error. But don't worry– it's never too late to start saving. You may still be able to secure a comfortable retirement for yourself, but you may need to make some tough choices to do so. Here are a few tips if you're getting a late start:

• Save as much as possible: The more you save, the more you'll have when you retire. Try to make the most of your contributions to IRAs, 401(k)s, and other tax-advantaged vehicles. Then supplement your retirement fund with mutual funds, savings accounts, and other investments.
• Cut current expenses: Chances are, not all of your expenses are completely essential. If you can wipe out or trim certain expenses, such as expensive coffees and daily lunches out, you'll free up more money to invest for retirement.
• Invest more aggressively: This can help you construct a large retirement fund in a short time. Certain stocks and mutual funds may enable your savings to grow more quickly. The tradeoff: These investments are subject to market risk which will expose you to greater volatility, including a possible loss of principal. Before investing in a mutual fund, carefully think about its investment goals, risks, fees, and expenses, which are included in the prospectus readily available from the fund. Review the prospectus carefully, including the discussion of fund classes and fees and how they apply to you.
• Delay retirement: You may have no choice but to postpone your retirement until after age 65. This strategy will buy you more time to build your nest egg. Plus, the more years you work, the fewer years of retirement you'll need to fund.
• Rethink your retirement goals: Set more reasonable goals for your retirement (no 60 foot yacht, for instance). That way, you won't need as much money to fund your retirement.

"If you fear you're getting too late a start, or you're not sure where to start, consult a financial professional," says Martin Walcoe, EVP of David Lerner Associates. "He or she can help you map out a plan to bridge the gap between where you are now and where you need to be when you retire."

IMPORTANT DISCLOSURES

Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. It is provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.

David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances.

Some of this material has been provided by Broadridge Investor Communications Solutions, Inc.

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