I’m Way Behind on Retirement Savings. What Do I Do?

Tanza Loudenback, CFP®

Tanza Loudenback, CFP®

I turn 58 this year and am at a loss for what to do or how to plan for my retirement. I only have a small amount of money invested through previous employers, and I’m not sure how to save now that I am self-employed. I am really concerned about my retirement but don’t know where to get good, secure help. 

– Harold

You’re not alone – most Americans are behind on retirement savings. It’s good to hear that you have some money invested in previous employers’ retirement plans, but there’s a lot more that you can, and frankly need, to do. Let’s look at some of your options.

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

Playing Catch-Up: The Moves You Can Make

You’re so close to retirement age that the best financial moves will be specific and deliberate, from how much you invest to which accounts you use to do it. You should also be planning for healthcare expenses and taxes, and reducing or eliminating debt where you can.

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

  • Max out your 401(k) and IRA, and add catch-up contributions if you can.

  • Consider delaying Social Security benefits up to age 70 to maximize your eventual benefit check.

  • Continue to work into your 60s. The more you can extend your earning years and push off your draw-down years, the better.

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

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

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

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

Getting Help From a Financial Planner

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

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

Here’s my advice for finding a financial planner: Limit your search to those who are “fee-only.” This means they’re compensated only by the fee their clients pay them, and they don’t get kickbacks or commissions from 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 wind up with an advisor who’s trying to make money by selling you on a specific annuity or investment product. 

What you really need right now is someone who will help you pinpoint your goals and build a plan of action around them. You need someone who can evaluate your current financial situation, identify any gaps, and make specific, actionable recommendations.

If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now.

But of course, this isn’t free. 

The median cost for project-based financial planning services, such as developing a retirement plan, is about $2,500. I realize that’s not pocket change for most people. But don’t think about the fee as a sunk cost, think about it as an investment. If a financial planner can help you put away an extra $2,500 for retirement, minimally, the arrangement has paid for itself. Certainly they’ll help you do much more.

Tips For a Secure Retirement

  • Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost 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 on retirement savings? Use our retirement calculator to see how you’re pacing against your retirement income needs.

Tanza Loudenback, CFP® is SmartAsset’s financial planning columnist, and answers reader questions on personal finance topics. Got a question you’d like answered? Email 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.

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