I am 40 years old with no retirement benefits with the company I am currently employed with. What is the best way to start saving?

Asked by Heather

3 Answers

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Answered by Michael Keeler, CFP®, CLTC in Las Vegas, NV
The best way to start saving is to have some different accounts for different time horizons. For example, a savings account with 3-6 months worth of living expenses is a great way to start for short term money. Once you have that, you can start thinking longer and open up a Roth IRA or traditional IRA. This is money you can take out after 59 1/2. | 10.14.15 @ 17:42
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$commenter.renderDisplayableName() — {comment} | 12.06.16 @ 14:30
To "start" saving for retirement at 40, you're playing catch-up, but the good news is that you still have time to develop a plan and execute it...the key word being "execute." It's going to take discipline on your part, and you'll have to learn to pay yourself first.

One of the first questions I'll ask is about your debt-load...how much debt are you carrying? Priority number one is paying off your highest-interest debt first, and subsequently paying off the rest of your debt in order of highest interest rates (that interest you pay will KILL your retirement).

Assuming no debt, as Michael stated earlier, if you don't already have a liquid emergency fund established, this should be priority number two (I like between 9 to 12 months' worth of living expenses). And it becomes much easier to get to the 9-12 months' worth mark once you roll the dollars you had going toward debt into your emergency fund. For this money, I like money market accounts, as they pay you a slightly higher interest rate than a typical savings account.

Once your debt is paid off and you have an emergency fund established, only then should you start to invest for retirement. Take the money you had going toward debt and toward building your emergency fund and put it to work for you. Assuming at least 25 to 30 more years of work, you have plenty of time to accumulate a nice retirement WITHOUT exposing your money to risk. At 40, you cannot afford to lose money in the market, especially when there are safe-money strategies that will allow for a reasonable rate of return, typically 4% to 8%, with ZERO risk of losing principal. If you haven;t read Patrick Kelly's book "The Retirement Miracle" I suggest you do, and incorporate that as one of your strategies.

I love the Roth IRA, but depending on how much you make (unless you're a Federal Employee), the maximum contribution allowed is rather limiting. But if you can learn to live below your means and adjust your budget to do so, saving 15% to 20% of your annual salary will allow you to catch up rather quickly. If you can do more, than do more.

I'd be happy to answer any questions you might have throughout the process...just reach out.

Mike Zaino
www.TZGFinancial.com
| 04.02.16 @ 16:07
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$commenter.renderDisplayableName() — {comment} | 12.06.16 @ 14:30
Answered by Dave Bradley, Investment Manager (Financial Advisor) in North Charleston, SC
Hi Heather,

I am less concerned with your age and more concerned with ;
1. When do you want to retire (Time)?
2. How much do you need to retire (Lifestyle)?
3. how much can you contribute ($$)?

There are lots of choices here. We can easily set you up with a self-directed ROTH retirement plan, traditional 401K, or many of the others., We manage a concentrated portfolio that we understand very well. The reasons are simple. It is less important whether you know 10 businesses or 10 thousand. Stick with what you know and understand. At the Olympics, if you run the hundred meters well, you don’t have to do the shot-put.

On diversification, we hear a lot of noise about this. Well, if Michael Jordan is on your team and he is scoring all the points. Should you penalize him by diversifying your strategy more? What is your MARR- Minimum Acceptable Rate of Return? To efficiently determine this we need to understand how much you need in retirement. We focus on low risk and high return.

Should you use us or do it yourself? We offer both. Always do what is in your best interest and we will support you either way. All we ask is that you get where you need to be and stay there.

Give us a call to discuss your situation in greater detail. No obligation. My job is to eliminate risk and demand your satisfaction.

It's not what you make, It's what you keep that determines your lifestyle. | 04.08.16 @ 20:47
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$commenter.renderDisplayableName() — {comment} | 12.06.16 @ 14:30
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