Retirement Planning Specialist Derrick Kinney Offers 4 Steps to Catch Up on Your Retirement Savings in Your 40s, 50s, and 60s

ARLINGTON, Texas, Jan. 19, 2012 /PRNewswire/ -- If the recession has caused you to fall behind on your retirement savings, you're not alone. Forty-three percent of Americans had less than $10,000 saved in 2010. However, if you are one of the 43 percent, even if you haven't saved anything at all, you CAN still retire comfortably regardless of your age.

Nationally recognized retirement planning specialist Derrick Kinney, principal of Derrick Kinney & Associates (http://www.derrickkinney.com), says many people think if they're 40 or 50 or even 60 years old and haven't begun to save for retirement, than it's too late, but this simply isn't true.

"When you hear an expert in the media say you need $1 million to retire and you haven't saved anything at all, it can be very discouraging," says Kinney. "But your 40s through your 60s are the time when all the financial obligations associated with raising a family have decreased and you can finally focus on funding your retirement. It's the perfect time to play catch-up."

Step 1: Create a detailed catch-up plan. "Determining the amount of money you will need in retirement can be difficult," he said.

You must factor in the inflation rate, your retirement age, the longevity of your retirement and your expected expenses including your increased medical costs. For obvious reasons, calculating retirement income can get complex fast, but there are online calculators that can provide an estimate. Plus, there are some widely accepted guidelines you can use as a baseline such as planning to live on 80% of your pre-retirement income. After you have determined the estimated amount of money you will need to save, use that number to create realistic, yearly goals.

Step 2: Redirect spending to build your savings. "So you've made your goals and realized you only need to save a few hundred dollars each month to have a secure retirement, but where exactly where this money come from? Simply put, you must prioritize saving for retirement and create a plan to reduce your debt, live within your means and save," he said.

Since you are beginning to save later in life, Kinney recommends you save 20% of your salary each month. Take advantage of online budgeting websites and smartphone apps that connect to your accounts and track your spending to determine wasteful spending habits. Cut out these habits and redirect the money to your savings account. Also, consider automatically directing any raises you receive to your savings account. You can't miss money you never touched.

Step 3: Invest wisely and max out your 401(k). After you have built up your savings, you will need to invest some of it to ensure future income.

"Since you are starting to save later in life, you can't be afraid to take some risks," he said. "Yes, the market does fluctuate, but overall it has a pretty good track record and still remains a good bet against fighting inflation. Begin investing by maxing out your contributions to your 401(k), 403(b) or IRA. Next, consider purchasing exchange traded funds (ETFs) or mutual funds. Make it a point to review your investments periodically to ensure they are performing to your expectations."

Step 4: Buy the appropriate insurance. Statistics show that nearly 2/3 of retirees will need long-term care either at home or through an assisted living facility and the cost can be upwards of $50,000 annually.

"To ensure skyrocketing medical costs won't destroy their financial security, retirees should consider purchasing long-term care insurance as well as health insurance," Kinney said. "It's important to realize long-term care insurance does not cover the same day-to-day medical expenses that health insurance covers and if you retire at 59.5 you are on your own when it comes to providing health insurance. Retirees may also want to consider buying life insurance if they have dependents."

"By following these four steps, anyone can set themselves up on the path to a more secure retirement even if they're in their 40s, 50s or 60s," he said.

About Derrick Kinney and Derrick Kinney & Associates
Derrick Kinney is a nationally recognized personal finance advisor that has been interviewed by Bloomberg TV, CNN Radio, CBS Marketwatch, Money Magazine, The Wall Street Journal and many more. He is the principal of Derrick Kinney & Associates, a financial planning practice located in the Dallas/Fort Worth metroplex and holds ChFC, CASL, and CLTC designations. For more information on Kinney visit http://www.derrickkinney.com.  

Contact:

Derrick Kinney
[email protected] 
817.419.6001

SOURCE Derrick Kinney & Associates