Getting Back on Track

When Don turned 50, retirement began edging into his thoughts. But after taking a look at his retirement fund, he felt like leaving the work force was more fantasy than certainty. While he thought he’d done a good job of saving for retirement, he’d never put the maximum amount into his employer’s 401(k) account, and the recent stock market and economy hadn’t been kind to him. With so little time left for building a comfortable nest egg, Don enacted a drastic but doable plan that put him back on track for a content retirement.

Saving for retirement became the No. 1 priority for Don. First, he got serious about trimming his spending and upping his saving. He started paying attention to where his money was going, cut out unnecessary costs that added up, like subscriptions for newspapers and magazines he never read, and paid more attention to senior citizen discounts that allowed him to stretch his dollar. He also focused on paying off credit cards with high interest rates, and when his balances were paid off, he used the extra money to max out contributions to his employer’s 401(k). Since he turned 50, he was able to contribute an extra $5,500 in catch-up contributions. He also created an individual retirement account (IRA) and deposited additional money there, making maximum contributions when budgeting allowed.

Once he regulated his retirement contributions, Don reassessed his investments and realized he did not have much invested in stock. He knew that stocks gave him a way to make his money grow, but he wasn’t in a position to gamble. He invested conservatively in a handful of stocks that could bring in modest gains. By spreading his investments out, he lessened his risks and would be unlikely to see drastic losses that would put him back at square one.

Finally, Don and his wife, Sandra, re-evaluated their housing situation. Their two sons had moved out, leaving the couple with a hefty mortgage on a two-story house that was too big for their needs. The pair went on the hunt for a smaller, less expensive home, ultimately finding one that was closer to Don’s office. That gave them a two-for-one budget asset, allowing them to save money not only on mortgage payments but also gas money. They were also able to hold a large garage sale, selling items they no longer had room for. The money from the sale went right to savings.

Looking back, Don wishes he would’ve paid more attention to his retirement fund at age 25. But with a few lifestyle changes and reassessment of his portfolio, he’s making up for lost time by sticking to a budget and maxing out retirement contributions, paving the way for cheerful golden years.