Saving & Spending

Boost 401(k), cut spending if you’re behind on saving

Dear Pete,

I’m 58 years old and for the first time ever, retirement seems real to me. The problem is I don’t have any money. I make a lot ($200k a year) at my new job, but due to a large number of circumstances, I currently don’t have any retirement assets. I’m so upset about the circumstances (divorce, business failure, etc) and my lack of savings, that I almost feel paralyzed. I know I need to do something, but I’m too embarrassed to go to a financial planner. I feel like I’ve ruined my financial life. Do you agree?

Richard

Concord, NH

I have bad news for you. A successful retirement is entirely possible. You didn’t read that wrong. The numbers actually work.

The bad news is it will require significant changes and a well-executed plan. 

By my math, if you’re able to work for another decade, you will have earned an additional $2 million. And it’s in that spirit in which we’ll begin our time together. Beyond your $2 million, your maximum Social Security benefit will be available in just 12 years.

If you’ve been making “good money” all along, your Social Security benefit will likely be around $4,000 a month. Currently, the most a person can receive when filing at age 70 in 2020 is around $3,700, but I’m going to assume this will climb to around $4,000 in the next 12 years. 

Currently the most a person can receive when filing at age 70 in 2020 is around $3,700.

Our goal is to take the estimated $13,200 a month you currently make post-tax and create a scenario in which your income needs shrink over the next decade to meet the income available at age 70, all the while building up your assets.

It’s a rather simple idea, but it requires significant courage to execute. Once you do all the right things, which I’ll list below, you should be able to put your financial life on autopilot. Your future success requires immediate action. As much as I hate to say it, if you delay, hope will fade quickly.

Source

neallesh@yahoo.co.uk

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