While it may be tempting to splurge with your extra income as an empty nester, do not ignore your own future and retirement. You can substantially contribute to your retirement fund once your children are supporting themselves.
Save more, work longer and live frugally.
Saving an additional $1,000 or $2,000 a year can make a considerable difference at retirement. One of two more years of your annual salary can also make a huge difference in your retirement fund. Consider downsizing your home, purchasing a more affordable car and limit restaurant and entertainment expenses.
Techniques for Focusing on Your Retirement Savings
- Take advantage of catch-up contributions for retirement accounts
Once you turn 50-years-old, you can make catch-up contributions to your retirement accounts. You can contribute an additional $6,000 per year to your 401(k) and $1,000 to your IRA.
- Consider dividends in lieu of a 401(k) or IRA
If you do not have a 401(k) or IRA, or you already contribute the maximum yearly amount to your retirement accounts, consider stocks that offer dividend reinvestment. Reinvesting your dividends can help grow your account balance over time.
- Review your retirement income plan
Consider making yourself more marketable to employers by learning new skills. Once you retire, you can consider working part-time to reduce the stress on your retirement accounts.
- It is never too late to plan for your retirement
Many pre-retirees falsely believe that there is nothing they can do to build retirement assets and, as a result, do nothing. Remember that you control how much you invest and how much you spend. Consult with a financial advisor to make a retirement and spending plan and stick with it.
Contact a Fifth Third Bank financial advisor to create a retirement saving and investment plan.