I’m turning 58 this year and I no longer know what to do or how to plan my retirement. I’ve only invested a small amount through previous employers, and I’m not sure how to save now that I’m self-employed. I am very concerned about my pension, but I don’t know where I can get good, safe help.
–Harold
You’re not alone: ​​most Americans are behind on retirement savings. It’s good to hear you did that some money invested in the retirement plans of previous employers, but there’s a lot more you can and, frankly, should do. Let’s look at some of your options.
A financial advisor can assess your financial situation and help you create 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 steps will be specific and deliberate, from how much you invest to which accounts you use. You should also plan for healthcare costs and taxes, and reduce or eliminate your debt where possible.
Here are several ways you can grow your savings and possible retirement income:
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Make the most of your 401(k) and IRA and add catch-up contributions when possible.
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Consider delaying Social Security benefits until age 70 to maximize your eventual benefit check.
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Keep working until you’re sixty. The more you can extend your earning years and delay your drawing years, the better.
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Move to a place where the cost of living is lower, downsize your home, or limit your discretionary spending.
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Take advantage of self-employment tax deductions, such as writing off business expenses.
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Use tax-advantaged retirement accounts for self-employed individuals, such as a SEP IRA or Solo 401(k), which have high annual contribution limits.
Depending on your personal situation, some or all of these tactics may be appropriate.
Get help from a financial planner
The best way to manage all these priorities is to consult a financial advisor. Since you need financial planning services, it is best to find someone who is a certified financial planner (CFP). Many of these professionals live to help people deal with difficult financial situations like the one you are in.
But it sounds like you’re a little overwhelmed when it comes to finding someone you can trust. It is normal to be skeptical. Money is an emotionally charged subject; for many, it can be embarrassing or wrong to talk about it 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: Narrow your search to those who work for a fee only. This means that they are only compensated by the fee their customers pay them, and they do not receive kickbacks or commissions for the sale of certain financial products. (Someone who receives such commissions is often referred to as 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 end up with an advisor trying to make money off you to sell a specific annuity or investment product.
