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How to Catch Up on Retirement Savings in Your 50s

David Ning

With endless temptations relentlessly urging us to spend our money, it's no surprise many people are behind on their retirement savings. For people in their 50s, the realization of not having enough saved could be shocking. But don't panic, because that's likely the worst reaction to the issue at hand. Instead, immediately do these things:

Take advantage of catch-up provisions. Workers 50 and older are allowed to put more money in tax-advantaged accounts than younger people. In 2013, older workers can stash an extra $5,500 in a 401(k) and $1,000 in an IRA. It doesn't sound like much, but tax-deferred savings will compound much more quickly and be a big aid in retirement.

Tighten up your investments. Many people invest whenever they get a hot tip from a trusted source. They might pick up a mutual fund here, a hot stock there and end up becoming investment collectors. Investing can be simple, but only if you actively avoid following the herd. Learn about investment basics such as keeping costs low, diversifying and investing in broad market index funds, and you'll do better than the vast majority of the population.

Keep up and continually be a star player at your company. The biggest threat to your retirement savings is not having a paycheck and being able to save some of it consistently. People have this idea that older workers are automatically less desirable to an employer, but that is nonsense. Would you let your best employee go just because he is getting old? Of course not. But if you are paid more than average, aren't really motivated at your job, set in your ways and you don't really keep up with the ever-changing industry innovations, what else do you expect your employer to do? Work hard, be open-minded and continually outperform your peers.

Consider starting a side business. There's never been an easier time to create a side income stream. The beauty of having side income is that you can save more, and you won't be as nervous about losing your day job income because you have a backup if you are ever laid off. Best of all, you'll continually have an income stream even after you retire.

Start tracking your finances. Get a good picture of where your money is going, so you can selectively reduce consumption in areas that don't matter much to you. Once you figure out how much you spend on a regular basis, estimate how much you'll need in retirement and start plotting a way towards plugging the hole.

Start saving anything. For those who have absolutely no savings, I encourage you to start saving a little, no matter the amount. Start with a dollar a week if you can't afford anything more. Once you are in the habit of putting money aside for the future, it will be much easier to increase the amount.

Consider downsizing your lifestyle. No retirement plan can ever work if you always spend everything you make. Imagining a lifestyle spending less can be difficult, but the funny thing is that no matter your spending level, there are many others spending much less while living a fulfilled and happy life. Stop seeing spending money as a solution for every little problem in your life, and you'll be spending less in no time. Take out your budget, cut out anything that isn't contributing to your level of happiness and bank the rest. You'll amass a solid nest egg in no time.

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