Ask Terry Questions Aged 50 and no retirement savings, help what next?

Aged 50 and no retirement savings, help what next?

By Terry Savage on September 03, 2015 | Investments

What is the best route to go when savings for retirement at age 50, life has gotten in way, I want to double my saving at a rapid speed. Help!!

Terry Says:  Well, I think you’ve answered your own question.  Yes, you have to double the amount you put away!  And if you participate in a 40l(k) or 403 (b) plan where you get a matching contribution of 50 or even 1oo cents on the dollar, then you’ve solved a big chunk of your problem.

But if you’re asking where you can invest to double your money — well, let me ask you a question in return:  How much are you willing to lose??  Risk and reward are opposite sides of the coin.  And I don’t think that speculating with your retirement is a wise thing.  Yes, over the long run (at least 20 years, which you have since you certainly should keep working until age 70) you can expect an average return of 10 percent on the stock market over that long run (with dividends reinvested), so just stick to a S&P 500 stock index fund.  That’s the return that history says you can expect.

And by the “rule of 72” if you earn 10% on your money, it will double in 7 years!  Of course, your contributions in later years won’t have as long to grow, and you’ll likely switch to more conservative investments than the S&P 500 as you near retirement.  But that is the basic plan.  Or you can start more conservatively now, by using an Equity-Income fund from a major fund company like T. Rowe Price or Fidelity.

Do it inside an Individual Retirement Account, where you can put $6500 a year aside — either deducting it from your income on your tax return, or in a Roth IRA, where you don’t get a deduction but never have to pay taxes on the withdrawals.

But there is no magic answer to your question — except to get started now, make a plan, and STICK TO THE PLAN through all the market gyrations!



a personal
finance question