40 Years Old and Broke?
You had high hopes when you were 20: you’d have it all, a great job, nice house and a nest egg that would rival Donald Trump’s. Fast forward to 40 and you haven’t accomplished any of that. Maybe you’re happily married with kids, with a job you like, and things are comfortable. But you’re broke. You’re just getting by day to day and an investment plan is the furthest thing from your mind. Don’t worry, it’s not too late to start saving. You just need a great idea to help you make extra money!
You’re Not Alone
Bankrate did a survey that says five percent of employees between the ages of 45 to 54 have less than $25,000 in retirement savings. That’s not all: six out of 10 have less than $100,000. This is a common occurrence especially among parents who are socking away a bit towards their kids’ college educations while neglecting their own retirement funds. How can you start saving smart and building up some cash?
A Side Business
You may be working at a company full time, but your paycheck’s just not working for you beyond the base necessities. It’s time to brainstorm and come up with a fantastic idea to generate income on the side. If you’ve got $100 and a unique idea, you can create your own website to post blogs, sell ad space, and showcase your product or service. Use the profits to supplement your regular salary and add to your retirement account. If it does well, sell it and make even more money for your nest egg. Consider becoming a consultant on Upwork, selling your handcrafted items on Etsy, or becoming an Uber driver. The possibilities are endless!
Max Your 401(k)
When you increase your 401(k) to the maximum limit, complementing that of your employer match program, you can build your savings account painlessly. Saving 10 percent of your salary is the goal. However, that can be hard to reach if you’re already broke. But think: if you’re 40 now and would like to have $1 million saved for retirement, you must save $10,000 a year at nine percent. In addition to your workplace 401(k), sock away a little money (perhaps from your new side business!) into an IRA.
It’s time to start thinking smart about asset allocation and diversification. Playing it too safe at this stage in the game won’t get you to your retirement goals, but with 20+ years to retirement still ahead of you, you can afford to play both sides of the coin. Aim for stocks for 80 percent of your portfolio with the rest in conservative holdings like bonds. Getting assistance from a financial planner or stock broker can help you determine which investments are best for your current financial situation. Get in low and watch your stocks work FOR you rather than against you. Be careful though: not all brokers have your best interests at heart. As such, you should know a securities attorney just in case you fall victim to unsuitable recommendations, excessive or unauthorized trading, and misrepresentation. Contact Thomas Law Group if you require professional advice on keeping your investments safe.