The following is a guest post about budgets by Lisa at Frugal Living, an Australian personal finance blog created to talk to readers about frugality and living below your means.
Let’s face facts: most people aren’t going to be able to retire at age 62. Some won’t be able to retire at age 72. The thought of maintaining employment well into your 70’s sounds daunting to most… will you be able to work when you’re 70 years old? Will the minimum-wage paying job even earn enough to make a difference in your personal finances? Let’s examine four retirement options that working adults may wish to consider sooner – rather than later – in life.
Retirement Plan 101
Here’s the #1 fact of the matter: it’s not too late to coordinate your retirement fund. Will you have generated as much money as someone who’s been contributing to his/her account for 40 years? Of course not. But imagining that it’s too late to save at all is unreasonable. Basically, it goes like this: if your employer doesn’t have a 401(k) plan available to you, you can still open an individual retirement account at a mutual fund company or brokerage. Those who don’t have a pension plan offered through their employer can put away up to $6,000 pre-tax a year. Say you’re 50 now, and able to contribute $6K annually for the next 15 years. That’s still $90K to live on post-retirement… if you have little to nothing saved to date, wouldn’t it be silly not to set up your own pre-tax account?
Living frugally – living within your means in order to save as much money as possible – isn’t a new ideal. Blogs and websites that explain the principles of budgeting, living sustainably, and urban homesteading are at an all-time high, popularity-wise. With print magazines like The Mother Earth News hitting more than 30 years in publication, the frugal living concept proves to be a strong one. Living frugally may mean a lifestyle change for some. For others, these are the same ideals they were raised with: the transition is in adopting the life habits which will allow them to save the greater portion of their salaries, rather than squandering it.
Light Taxes and Low Cost Living
According to Forbes Magazine, five cities across the U.S. are the best for bargain retirement. Colorado Springs, Indianapolis, Charlotte, Indianapolis, Tucson, and Kansas City all made their list. Several other cities are known for “light taxes and low-cost living.” All things considered, the fact remains: during retirement, the majority of people want to stay close to their loved ones. Cost of living, taxes and 401(k) aside… you can’t take it with you when you go. Knowing that your family is nearby is paramount to staying connected.
Cuenca, Ecuador was rated the #1 place to retire abroad by CBS Moneywatch. As Ecuador’s third largest city, Americans who have retired in Cuenca have reported living comfortably for about $17,000 a year. Cuenca boasts all the comforts Americans may desire, including beautiful weather year-round and shopping in the modernized suburbs. Is retiring abroad an option for you? Some things to consider are (potentially) the need to learn a second language, living apart from your family and lifelong friends, becoming a citizen of a foreign country, and in doing so, giving up the security or backing provided by the United States.
Realizing the fact that it’s not too late to amass funds which can help keep you living comfortably during your golden years – and knowing your options for saving the money – is only half the battle. Overall, the greater chore is to begin doing saving… and soon!
Did you start saving for retirement late in life? How are you working to put away funds which will help support your retirement? Share your tips here.