You’ve made a significant yet common financial oversight. For the past 25 to 30 years, you’ve been so occupied with work and raising a family that you’ve neglected to save sufficiently for retirement. Alternatively, perhaps you thought you had saved enough but spent a large amount on college tuition, luxury cars, vacations, a country club, and an expensive suburban home you couldn’t afford initially.
Now, retirement is just a few years away, meaning no more regular paycheck. You lie awake at night pondering how to fix your financial situation. The good news is that your large suburban house can be put to good use. If you’ve diligently paid your mortgage for decades, you can leverage the equity through a reverse mortgage.
With a reverse mortgage, you can receive your funds either in a lump sum or in monthly payments. The best part is you only need to repay the loan if you leave the house or pass away.
Who are the best reverse mortgage lenders in 2023? Make yourself a coffee, sit down at your laptop, and visit reversemortgagereviews.org. You’ll find most of the information you need.
But what other strategies can you use to fast-track your retirement savings? According to a recent article by The Motley Fool, many Americans are unsure how to properly save for retirement. Research shows that workers aren’t saving nearly enough to maintain their current lifestyle post-retirement.
A recent Wells Fargo survey found that nearly 50% of workers had to delay their retirement savings contributions due to current financial challenges. Similarly, a TD Ameritrade study revealed that 62% of Americans are behind in their retirement savings. Only 40% of U.S. workers in an EBRI study reported having saved $25,000 or less, which won’t last through the first year of retirement.
Now that you’re aware of the bad news, here’s the good news: It’s possible to fast-track your retirement plan in middle age, or at any age. Here’s how:
Prioritize Saving
The Motley Fool emphasizes the importance of a “save-first” mentality. Treat your retirement contributions as non-negotiable. If it means driving a cheaper car, eating ramen for lunch, and skipping weekly beers to ensure you save, then do it. This mindset is crucial for building momentum in your retirement savings.
Set up automatic contributions to an IRA or 401(k) and increase your savings rate whenever you get a raise, a bonus, or manage to cut everyday expenses. Even a weekly increase of $5 to $10 can make a significant difference over time.
If you’re in your middle years, try increasing your monthly contributions by $100. Over a decade, this can accumulate into a substantial amount.
Drive an Older Car
Forget about buying that new Range Rover. New cars lose 20% of their value in the first four years. Opt for a used car, and if possible, pay in cash. Although you’ll spend more on maintenance, you’ll avoid a monthly car payment, which can be around $500, and your auto insurance will be cheaper.
Live in a Smaller Home
Living in a modest home saves on maintenance, utilities, and lowers your mortgage or rent. Smaller homes also mean less property tax and fewer items needed to fill the space.
Use Cash
Overspending can severely impact your retirement savings. Instead, create a budget. Add up your mandatory monthly expenses like utilities, rent, and retirement contributions. Subtract these from your monthly income. The remaining amount can be used for entertainment, clothing, food, and gifts.
Invest for Rapid Growth
In middle age, consider investments with the potential for rapid growth, like Bitcoin. Despite its volatility, Bitcoin has averaged around 100% growth per year, offering the possibility of significant wealth in five or six years.
However, this is not financial advice. Consult with a financial advisor before making any investment, whether traditional income funds or newer options like cryptocurrencies.
