- This video discusses what to do if you're over 50,
have very little savings, and want to retire on time.
Coming up next on "Holy Schmidt!"
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- [Child] Holy Schmidt.
- Oftentimes we get caught up in life,
trying to make a name for ourselves in business,
trying to provide for our families,
trying to navigate the social scene.
Many people were never given the education
to prepare for retirement.
And so as a consequence, they knew that they were
supposed to do something, but it was always tomorrow
when that something was going to get done.
And now, at 50-years old or later,
the decision to prepare for retirement
is right in front of you with not a lot of years
left to prepare.
This video will show you what to do if you are
in that situation.
But before we begin,
please make sure you click subscribe notifications
so that you get alerted the next time I post a video.
I post about twice a week.
All right, let's get into it.
Point number one, and this is probably an obvious one
for many people.
Early retirement is not really an option
if you haven't prepared for retirement.
Someone told me one time, you can have anything you want,
you just can't have everything you want.
And in the case of early retirement, you can have it,
but you have to start planning when you're in your twenties.
Certainly by the time you're 30.
Or early thirties, for most people, anyway.
Point number two is take advantage
of your catch-up contributions for your 401k or your IRA,
depending on which one you have,
or which situation you're in.
If you're over age 50, then you can add an additional
$6,500 to that, bringing your total contribution
to $26,000 in a single year.
If your employer doesn't offer a 401k, you can still invest
in an IRA in most cases.
There's a $6,000 contribution limit, unless you're over 50.
Then there's an extra thousand dollars
that you can contribute, bringing the total up to $7,000.
That differential between the under-50 contribution
and the over-50 contribution
makes a big difference in retirement.
Particularly, if you have 15 years or so left to go.
The next point, and this is solid advice even if
you're well-prepared for retirement,
is to downsize as if you're in retirement
as soon as possible.
Let me explain what I mean.
If you own a large home, for example, and your children
are no longer living there, you may wanna consider selling
that house and buying something smaller,
even if you're still working.
Why, because the cost to run a larger house
is more expensive than the cost to run a smaller house,
all things being equal.
And that differential, you can use to save for retirement.
And when you're in retirement, the cost base
that you are operating at and have been operating at
for a while at that point would be much lower.
The same holds true for other tricks of retirement,
like buying a pre-owned car.
Living a little bit more frugally.
Making sure that you set your thermostat to go up and down
depending on whether you're home or not, et cetera.
The next point is developing hobby income.
Hobby income really is taking what you do as a hobby
and monetizing it.
If you love to collect coins, cars, or baseball cards,
for example, and you know how to buy low and sell high,
taking what you do, part-time,
very part-time, and turning it into
a more regular activity could pay dividends
literally and figuratively in retirement.
More importantly, if you develop hobby income now
while you're still working, it is an additional source
of savings for you while you're waiting to retire.
Again, adding to your retirement nest egg.
The next point is delaying Social Security.
If you take Social Security at age 62,
what you receive is going to be a lot lower
than if you take it at full retirement age.
And a lot lower still than if you take it at age 70.
In fact, the difference between what you receive at age 62
and age 70 is over 70% in most cases.
So if you don't need the funds early,
delaying taking Social Security
means that you're going to be receiving more for retirement.
The next point is paying down debt.
Unfortunately, many retirees have debt service payments
as part of their regular monthly payment.
In fact, the average debt service payment for retirees
that have debt is 40% of what they bring home.
So if you could increase your spendable income by 40%
simply by paying down debt now, why wouldn't you do it?
The key to retiring on time though
is to finish strong and finish well.
And what we've just talked about are some of the tricks
of the trade, so to speak, on how to do that.
If you like this video, please make sure you click
subscribe notifications so that you get alerted
the next time I post a video.
Retirement is changing fast and I work very hard
to get what's out there in here for you.
Also check out this video on seven common income streams
people have in retirement.
This is Geoff Schmidt.
Thanks for watching.