By MINDY FETTERMAN
Gannett News Service

Feb. 11, 2008

Say you’re in what some now hopefully call “the new 30s.” That means you’re in your 50s. And say you’ve procrastinated so long that you haven’t saved enough money for retirement.

What should you do?

First, if you have kids, turn to them right now and make them start saving while they’re young. Not because it’s good for their soul, or because it’s a form of personal discipline that proves they’ve got what it takes to succeed.

If you’re 20 years old and you save $100 a month in an investment that earns an average 7 percent a year until you retire at 65, you’ll end up with $381,472. If you wait until you’re 40 to start saving $100 a month, you’ll have only $82,056.

If you wait until 50 . . . well, you get the point.

“You can’t make up for lost time,” says Michael Book, managing partner at Lenox Advisors, a wealth management firm. “People keep thinking, ‘There’s time for me, there’s time for me.’ ”

But say you’re a world-class procrastinator. Suppose you didn’t start saving at all for retirement when you were younger. Is there anything to be done?

Financial planners say, yes. But you have to do something. Cut spending on something. And turn it into saving something.

If you’ve procrastinated, here’s what you can do:

Save in a 401(k) account.

If your company offers a 401(k) retirement plan, be sure you’re saving at least the portion that your company will match.

Many employers match 50 percent of your contribution, up to 6 percent of your salary.

Save the “catch-up” amount.

People 50 and older can put an additional $5,000 a year in their 401(k)s. If you do so each year from age 50 to 65, earning an average of 7 percent a year, it would equal $128,000 in savings, Book says. “It’s another $425 a month in retirement income you get without even touching your principal,” Book says. (That’s if you take out no more than 4 percent a year from savings once you retire.)

Save automatically.

Once you’ve contributed retirement savings at the maximum level, consider setting up payroll deductions for other accounts, such as an emergency savings account or one for education expenses.

Cut small expenses.

Feel that you don’t have any money left over to save? Don’t want to make drastic changes in your lifestyle? Consider cutting back on small expenses, such as smoking or daily lattes at work.

Trim big expenses.

Look at what you spend money on and cut back on the big costs, such as entertainment and random shopping. Try to use cash, rather than credit cards, for major purchases.
Published: February 07. 2008 3:10AM
BONUS TIP
Consider working longer:

If you’re a fiftysomething who hasn’t saved a lot, you probably need to “get your head out of the sand’ and figure out what life after 65 is going to look like, says Michael Book of Lenox Advisors. You might need to work longer so you don’t spend down your savings. That means not retiring at 62, when you first qualify for Social Security, but rather waiting until 65. Or keeping a part-time job for years into the future, he says.