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How to Catch Up on Retirement Savings in Your 50s

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Data is increasingly showing that many Americans, even those in their 50s, have saved little for their retirement.

According to research by the nonprofit Economic Policy Institute, among households headed by adults ages 50 to 55, the median retirement savings is only $8,000, according to the Economic Policy Institute.

Lack of retirement funds is all the more concerning as today’s adults are expected to live much longer. In 1940, the life expectancy of a 65 year old was almost 14 years. Today it is just over 20 years.

Supplemental income like Social Security may not be enough to cover anything beyond basic needs, especially if retirees need extensive health care as they age. The average monthly Social Security benefit is $1,369, for an annual haul of $16,428 — that’s peanuts compared with the $46,000 that the average 65 year old spends in a given year.

For 50-somethings who are swiftly approaching retirement but feel as if they haven’t yet saved enough, it can be overwhelming. The good news is that you still have some time to catch up.

Here are seven ways to boost your savings and cut back on expenses.

Use a retirement calculator to set savings goals

Even though it’s late in the game, it’s important to get an idea of how much you need to save in order to have the type of retirement that you envision.

Organizations from the American Association of Retired Persons to insurance company Voya sponsor retirement calculators, which can project your individual financial goals and show you what it will take to reach those goals, even when you are late to the process. David Skid, executive director and financial adviser of Vantage Wealth Management at Morgan Stanley in Atlanta, suggests using a variety of retirement calculators, and comparing to make sure you get consistent results.

Retirement calculators will ask you to input several pieces of data, including your age, annual salary, how much you have saved for retirement so far and any pension you expect to receive, as well as this data for a spouse.

Retirement calculators will also often ask about your spending plans during retirement. For example, if you plan to travel or spend more on hobbies or dining out, calculators will take this factor into account when projecting how much you should save.

Take advantage of catch-up contributions

One good thing about turning 50 is an additional savings opportunity for your 401(k) and IRA accounts.

For eligible workers under the age of 50, the maximum contribution limit to a 401(k) is $19,500 in 2020, up from $19,000 in 2019, and to an IRA is $6,000.

But catch-up contributions allow eligible workers 50 and over to save more, which are called “catch-up contributions”. This boosts those total contribution limits to $26,000 and $7,000, respectively.

“The government gives the ability to turbocharge or jump-start [retirement savings] for investors that are getting a later start,” Skid said.

Don’t use your 401(k) like a piggy bank

It might be tempting when facing large costs such as college tuition to dip into your 401(k), but it’s best to not touch the account. All 401(k) withdrawals are subject to your ordinary income tax rate, and it’s likely you will pay more to take out money now rather than in your retirement years because you currently are earning more and therefore placed in a higher tax bracket.

Also, 401(k) accounts only allow for one loan at a time and loans must be paid back in five years, meaning you would have to take out all of the college tuition you would need in one withdrawal and pay back four years’ worth of costs in only five years.

If your child is vying to go to an expensive school and you’re tempted to use your nest egg to fund their way, think of this before you dip: College students have access to low-cost, flexible federal student loans and decades ahead of them to repay their debt. No one is going to issue a 50-something a low-rate loan to fund their retirement.

To save your child from the financial burden of paying for your retirement later in life, you might need to have a different conversation about paying for college on their own or taking out student loans. And it’s not only for your benefit — it’s for theirs, too.

“If we don’t save for our own retirement, then when we become older, we are going to have to be reliant on somebody else to financially support us when we are no longer able to work or face potential health challenges,” Skid said.

Enroll in employer match programs

When you are saving with a 401(k), some employers will match a percentage of the contribution you make to your account.

For example, your employer could match your contributions 100% up to 6% of your income. This means if you earn $100,000 and you place 6% into your 401(k), or $6,000, and your employer will add $6,000. If you add 8% of your income, or $8,000, your employer would still match you at 6%.

Not every employer offers a match and even when they do, the match they offer can be different. It is important for you to ask your company’s HR or similar representative to find out if this opportunity exists and how to take advantage of it.

If you haven’t taken advantage of this program or if your employer is just starting to implement matches, it’s worth your time to investigate. Employer matches are like free money to add to your retirement savings account.

“It’s important for all of us to make sure in our jobs what sort of match we might have available to us and contributing at least as much money as we can to get that free money from our employers,” said Skid, who also is a chartered financial analyst (CFA) and certified financial planner (CFP).

Also, if your employer’s 401(k) plans offer financial advice, take up the offer. A 2014 study by Financial Engines and Aon Hewitt found that 401(k) participants who received professional investment help in the form of managed accounts, target-date funds or online advice, earned higher median annual returns than others who invested on their own.

The study found that if two employees both invested $10,000 at age 45, one with advice and one without, the one who received advice could have 79% more wealth at age 65 than the employee without advice.

Add more income streams

Accelerate your savings by adding to your workload during the last few years until you retire or delaying your retirement if you are still healthy and able.

Add a part-time job or pick up an extra project at work to increase your monthly cash flow, some of which can be saved for retirement. Likewise, if you continue to work past 62, you can keep employer benefits, such as health insurance, and increase your time to add money to employer-sponsored retirement plans.

“If you are starting savings later in life, you might have to have a paradigm shift of when your retirement is going to start,” Skid said.

Automate your savings

Set your checking account to put aside money once a month into your investment account, instead of relying on yourself to manually do it, Skid says. You will be less likely to forget or bend to other expenses. Consider it your own personal payroll deduction plan.

Typically, most financial advisers suggest putting aside 10% to 15% of your income into a retirement account each year throughout your life. At this rate, financial services company Fidelity estimates that you should have about six times your salary saved up if you started saving at age 25 and planned to retire at age 67.

However, if you have delayed savings, a 2014 report from the Center for Retirement Research at Boston College found that in your 50s, you might have to boost the percentage of your income going to your account to almost 29% to reach a savings amount that is enough to live off.

Pay off debt aggressively

If you have enough cash on hand, Skid said accelerating your mortgage payments or paying down other consumer debt is another good way to prepare for retirement if you are late in the savings game.

Speeding up your mortgage payments would ease the burden of debt from the mortgage during retirement, when you would have less income to pay off the mortgage.

Because cash is earning you less than your mortgage is costing you, paying off your mortgage with that money will help set you up for a less costly retirement.

The same goes for high-interest credit card debt. You should still sock away at least enough in your 401(k) to capture any employer match, but then throw everything you’ve got toward tackling high-interest credit debt. Conservatively, you might earn 7% a year in annual stock market returns, while credit card debt can easily carry interest rates of 16% or higher.

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3 Online Alternatives to Warehouse Clubs

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With a 2-year-old daughter and a full-time job, life is hectic for Dallas mom and marketing professional Amanda Tavackoli. Often, there’s not enough time to think about or run to the store to pick up a pack of diapers, baby wipes or paper towels.

“Both my husband and I work full time, so it’s sometimes difficult for us to schedule everything that needs to happen,” says Tavackoli, 37.

Instead of squeezing a grocery run into her busy schedule, Tavackoli opens the Amazon Prime app on her phone, orders her household supplies, and within two days, they arrive at her doorstep.

Convenience, especially for families, is a factor in the popularity of purchasing household goods through subscriptions like Amazon Prime, says Paul Farris, a marketing professor at the Darden School of Business at the University of Virginia.

Amazon Prime reached 90 million U.S. subscribers, according to 2017 data from Consumer Intelligence Research Partners, a Chicago-based research firm. Almost 95 percent of these members said they will “definitely” or “probably” renew their subscription, according to a July to September 2017 survey by the firm.

At the same time, some of Amazon’s brick-and-mortar competitors are struggling to keep up.

Although Costco Wholesale has about 91.5 million cardholders as of November 2017 — 1.5 million more than Amazon Prime subscribers — the membership warehouse had only a 90 percent renewal rate in 2017, according to its annual report.

And Sam’s Club, the membership warehouse owned by Walmart, recently announced plans to close 63 of its clubs throughout the country and is converting as many as 12 of these facilities into e-commerce fulfillment centers. These closures reduced the company’s number of clubs to 597.

In recent years, Sam’s Club has also experienced low membership renewals. At the beginning of 2016, the renewal rate for its Plus members was only about 35 percent, from 2015 to 2016.

Farris says in addition to Amazon’s convenience factor, its free two-day shipping has helped the company dominate the playing field.

“Everybody in the world is trying to figure out how to handle free shipping,” he said. “Amazon has the (sales) volumes to make that work in a way that is much more difficult for other operations to generate.”

And Farris says Amazon’s ability to transcend local supply shortages has also made it and other e-commerce options more popular in comparison with traditional wholesale clubs.

One factor that favors brick-and-mortar Costco is price. In two separate price comparison studies conducted by investing news magazine Barrons in June 2017 and the San Francisco Chronicle in May 2017, Costco’s prices for a basket of top common household items were often cheaper than on Amazon.

However, the price difference doesn’t bother Tavackoli.

“It’s probably a little bit more expensive to go with something like Amazon, as opposed to running over to Sam’s Club,” she said. “But the convenience outweighs the cost for us, hands down.”

These online options for buying bulk are three alternatives to shopping at brick-and-mortar warehouse clubs.

1. Amazon Prime Pantry

One of the most popular perks of Amazon’s Prime membership ($99 a year) is its free two-day shipping. Amazon Prime also offers members in select cities free same-day delivery and same-day delivery for orders $35 and over. For some household essentials, subscription holders can have orders delivered within one to two hours.

Members have access to Prime Pantry, which ships bulky items like paper goods, trash bags, and oversized boxes and bags of snacks, such as chips and granola bars, that people traditionally purchase at warehouse clubs. Delivery boxes hold up to 45 pounds, and there’s a flat $5.99 fee per box.

“My own family’s use of Prime is that it’s so much more convenient,” Farris said. “You don’t have to worry about hauling it back home.”

Prime also gives its members much more than just fast delivery. Prime members can stream music, movies, and TV shows and gain access to Audible channels. There are also deals and exclusive opportunities for Prime members when shopping.

2. was founded in 2013 by a group of tech entrepreneurs. gives consumers another way to buy a large variety of brands in bulk online. In addition to simply buying in bulk, customers are offered curated boxes of products. For example, packages a wide range of snack options, like Cheez-Its, peanuts and Pop-Tarts, and ships them together in one box to customers.

With each order, users can choose to receive free samples, much like when shoppers walk down the aisle of a wholesale store like Costco.

And unlike Amazon, Boxed does not charge customers a subscription fee. Orders that meet a minimum price of $19.99 are shipped for free and ship within one business day.

3. is another online one-stop shop that offers everything from household essentials to jewelry and patio furniture.

But Jet’s standout perk is its “real-time savings engine.” This tool allows to pack specially marked items in boxes with other products, which the company says lowers the shipping costs for and, in turn, lowers the price tag for its customers.

Farris says options like could provide specific goods that local stores may not carry or have in stock when shoppers are there in person., which does not charge a subscription fee, also gives users who know they won’t be returning an item the option to save money by opting out of the ability to return that item for free. Also, for orders over $35, ships for free with delivery within two to five days.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.