You're 40 and broke; now what?
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Let's say you're 40, wake up one more and suddenly realize that you're practically broke. Hardly any savings. Your career seems never-ending. How can you turn things around and begin rapid wealth accumulation so you aren't working until the day you die?
Brian Loman is here to push you in the right direction. Brian, take it away!
I think you’ll agree when I say that it’s VERY important to have enough money for retirement.
But let’s be honest: Some of us realize this later in life than others, and it’s usually those who waste their money while they’re young. If you are one of these people, you might be wondering how to accumulate retirement-enabling wealth, and fast.
In this article, I will show you seven effective strategies for saving money that you can start using right now.
Let’s dive in!
1. Take a look at your living expenses and start trimming
The very first thing that you will need to do when going about building up your savings in middle age is to assess your current living expenses and figure out which areas you can start trimming.
There are most likely a lot of different places in your daily and monthly expenses that you can cut from, and it’s important that you take a close look. Do you go out to eat a little too often? Do you refuse to buy only designer label clothes? Maybe you could save money by switching internet providers.
There are a million different ways to cut down on your living expenses when you look hard enough.
If you want to learn even more about becoming financially independent, you should read this great article.
2. Are you a "people person"? Rent out extra space in your house for cash
One of the best ways to go about saving up for retirement even when you are 40 years old is to make some extra cash from the extra space in your house.
If you have a spare room or two in your home that you don’t really use for anything, you might want to consider this option.
Renting out your space rooms can help you bring in quite a bit of additional money on a regular basis. These days lots of people are getting involved with Airbnb, which allows you to rent out rooms in your home to those who are traveling.
3. Consider looking for a new job
While it may be true that finding a new job that pays better than the one you have now is easier said than done, you should still consider this option. A better paying job will mean that you are
able to put more money away in your savings account.
You might even want to consider getting a new job is another state or country if it means making significantly more than you are right now If you are tired of not making as much as you should, you will certainly want to think about doing this.
BTW, it’s absolutely possible to live without a job, did you know that?
4. Get rid of unnecessary insurance policies
Another very effective way to go about saving up money for retirement even in middle age is to get rid of any unnecessary insurance policies that may still be active. You may find that you can reduce or even get rid of certain types of coverage that you have right now.
Take the time to look through the various policies that you have to determine whether or not there are any that can be trimmed or even eliminated altogether.
5. Optimize your retirement contributions
If you want to have something left over for retirement, you will definitely want to start making a point of matching your employer’s 401(k) contributions so you can get as much “free” money as possible. A 401(k) offers you an excellent way to go about saving up for retirement, but you have to make sure that you are contributing enough to it yourself on a regular basis.
If your employer does not currently offer to match your contributions like so many others, you might want to focus on an IRA first. It’s important that you do not write off a 401(k) entirely
though because it can still be of great help to you. A lot of investment experts often make strong arguments for traditional and Roth
A lot of investment experts often make strong arguments for traditional and Roth IRASs, you will ultimately need to decide whether you want your contributions to be taxed by the government now or later. If you think that you’ll be in a higher tax bracket in retirement than you are right now, a Roth IRA is probably your best bet. If you are earning more now than you will be when you retire, a traditional IRA is a particularly good idea.
6. Choose your investments
Want to make some new investments but you don’t know what exactly to invest in?
There are a lot of different options available, so it’s important that you take the time to see what some of them are before making up your mind.
Index funds can be a good choice for those who are looking for a smart and responsible investment of some kind. Make sure that you do not invest aggressively like a young person
might, as that will only lead to trouble later on. While it’s true that index funds are in fact a good option, you will also want to make a point of balancing your portfolio with some investments that are generally considered to be safer.
It is incredibly important that you have a balanced portfolio if you want to make as much money as possible for retirement. Investments alone might not get you to where you need to be financially, but they can certainly help quite a bit.
7. Convert your non-earning assets into savings
Chances are there are plenty of non-earning assets you have that you could convert into savings. This could mean going down to a smaller home that costs less, creating a double win for your savings.
You will also need to think about relocating where you live. Those who live in particularly expensive areas where property values are high will need to think about going to a lower-cost
housing market. This could potentially save you a lot of money.
A reverse mortgage is also worth taking into consideration. This is essentially a tax-free loan against your home equity that doesn’t usually get repaid until after you move or even pass away. It is important to keep in mind that these kinds of transactions typically come with high closing costs and interest rates that could decrease the overall value of your estate.
A lot of people find that downsizing is a much better option than a reverse mortgage, but you are the one who has to ultimately decide.
You’ve read about 7 saving strategies. Now it’s time to implement them.
The first step?