Do you think it’s too late to begin saving for retirement? Nope. Sure, you might be in your 50s, but it is never too late to start socking away money for your winter years. You could have a nice little nest egg by the time you submit your resignation letter to your boss and get to enjoy the fine things in life: sleeping in on Mondays, eating anything you want, and loafing around at Tim Hortons.
Retirement is never a far distance away. It always right around the corner; your winter years will occur in a blink of an eye. It might be a morose thing to think about, but you have to plan and save for retirement ahead of time. It’s one of those things you have to do – it doesn’t mean you have to like it. Now that you are in your 50s, you may realize that you have neglected to save for these times. Sure, you should have started saving for retirement in your 20s, but look at it this way: It’s better late than never.
Here are nine ways to save for retirement and build wealth after 50:
1. Prepare for retirement without CPP
When you are thinking about your retirement lifestyle in the next 10 or 20 years, you should map out what income you can expect to receive. Many people make the mistake of not saving for retirement because they rely too much on CPP. However, when you are looking at ways of funding your winter years, it is best to not depend on things like the Canada Pension Plan (CPP) or Old Age Security (OAS).
You should consider these as top-ups or something extra in your bank account each month. It is nearly impossible to live on CPP or OAS alone.
2. Beware of your debt before retirement
The CBC recently ran a special report on the rise of zombie debt in Canada, old debts that were never written off because you forgot about it or they passed the statute of limitations. It is estimated that the average senior Canadian owes thousands and it could place stress on their finances should these debts go into collection.
Whether your debt is alive or dead, you should be worried about the red ink coming back to haunt you. Sure, that $5,000 smart television brought you momentary joy or those $5 morning lattes may have given you a reprieve from the daily stress of work, but they are not providing you with long-term financial security.
Put simply, tackle all of your debts immediately and ensure you are debt-free once you are prepared to call it quits. This is the best way to save for retirement.
3. Create a health savings account
Every year, Canadians are spending billions if out-of-pocket health care, such as treatment, pharmaceuticals, and anything else related to your medical care. It is difficult to predict how the government will be able to pay for health care in the future, despite many politicians promising universal eye exams, pharmaceuticals, and other programs you pay out of pocket.
That said, it would be prudent to create a health savings account and stash away five to 10 percent of your earnings. By the time you retire, you have a dedicated pot of cash strictly for your health.
4. Invest in dividend value stocks
Investments can be the best way to save for retirement after 50. A lot of passive investors are always searching for the next breakout stock that will deliver triple-digit gains in a couple of months. While there are stocks that do offer such returns, it is difficult to locate these picks. Indeed, it takes a keen eye and impressive knowledge of the market to navigate the market.
The best thing to do in your 50s is to invest in value stocks that offer a dividend. These are stocks that sound fundamentals and have a great track record of paying a quarterly dividend during the highs and lows of the marketplace.
So, for instance, Wal-Mart has been a dependable stock in terms of providing value during the boom and bust phases, in addition to offering an attractive dividend yield. Or, another stock that is more important to the Canadian economy: Suncor Energy, whose shares have been steady and a dividend that has been banked on for years.
By parking your capital in dividend stocks, you can expect a cash injection every three months in your retirement. This is a good source of income.
5. Get an easy part-time job for money
If you have been neglectful of your retirement savings after all these years and you need to play catch up, then you can get ahead of the game by attaining a part-time job. A part-time job can be a terrific way to save money for retirement.
Does it need to be a position in the trenches? Hardly. It can be something easy or fun. What that is is entirely up to you. As long as you are getting another paycheque for 10, 15, or 20 hours of work per week, then that is all that matters for your retirement.
6. Downsize your retirement lifestyle
How expensive is your lifestyle right now? How much of your paycheque goes to your cable package, your gym membership, or car payments?
Here is what you can do to get more from your earnings: Downsize your lifestyle. This consists of cutting spending and only putting the fruits of your labour to your essentials, such as housing, hydro, and food.
You could thousands of dollars per year in your piggy bank by scaling back your budget.
7. Save your monthly surplus
Are you finding that you generating a surplus at the end of every month? It might be $50 or it might be $500. Whatever the case, it is important to bank this monthly surplus rather than spend or just leave in your chequing account. Over time, that money adds up, then when you factor in the interest… Well, you are in for some great returns.
8. Never touch your retirement savings
You likely have a partial retirement savings account that has a few thousand dollars in it. If so, do not touch it for any reason. Just leave it alone. Let it sit there. Only look at it from time to time. The best way to save for retirement is to your retirement savings stay intact.
9. Move in with your adult children
Did your adult children move back home during or after college to save some money? You happily obliged and ensured they saved enough money to move back into the world on their own. Perhaps you even contributed some money to their down payment for a house.
Well, fast forward 20 or 30 years, and it is time for your son or daughter to repay you. How? You should consider moving in with your adult kids either now or at the time of your retirement. You could sell your home, bank the profit, and save money in your old age by participating in some generational living.