In Your 60s

How do you approach investing for retirement when you come to the table late? It’s a question more and more pre-retirees are asking now that they find themselves just a few years from retirement age with little or no savings.

Margaret C. and her husband are part of this group. She recently wrote to tell us about her situation. “I am 60, and my husband is 63. He has a small retirement fund; I have none,” she said. “My job does not participate in any kind of retirement vehicle. My husband’s employer does have a matching program, which we have maxed out. We are out of debt except for our home.”

If you’re in this group, you’re in a tough spot—there’s no way around it. We understand that you’re anxious about your future, and you may be beating yourself up for not taking action sooner.

But it’s time to put an end to all that. It’s true that there’s no magic formula that will instantly give you a multi-million-dollar nest egg, but with careful planning, disciplined budgeting and a positive outlook, you can build a decent retirement fund that will keep you content.

Pay Off Debt ASAP!

We’ll use Margaret and her husband’s situation as an example of this. They have a good start—they’re debt-free, which means they can save a ton of money for retirement. But they still owe on their home, and that could be preventing them from saving even more. Mr. and Mrs. C. could consider downsizing to a smaller home they can pay cash for. They’ll not only be able to save more now, but they’ll also have the added security of living in a paid-for home once they do call it quits at work.

Keep Working

As long as they’re healthy, Mr. and Mrs. C. should keep working and saving. Both Mr. and Mrs. C. can contribute up to $46.500 max in their TFSAs thanks to catch-up savings provisions. And Mr. and Mrs. C. can both contribute $5,500 each year to their own TFSAs. Working longer will give them time to build up their savings and will reduce the number of years they’ll need to live off of their savings. Once they do retire from full-time work, income from a part-time job can stretch their retirement dollars even further.

A Word About CPP

We tells folks saving for retirement to pretend that CPP doesn’t exist. If it’s still available when you retire—great! If not, you won’t miss it. But for Mr. and Mrs. C. as well as millions of folks in their position, CPP will play a big role in their monthly income. If they can delay taking CPP until they’re 70, they’ll maximize their monthly payments. For example, a 65-year-old retiring this year could receive a maximum monthly benefit of $1,092.50, but a 70-year-old retiring this year could receive $1551.35 a month.

Make Wise Choices Now

If Mr. and Mrs. C. can max out their retirement savings options, they could have more than $250,000 set aside for retirement by the time Mr. C turns 70. It’s extremely important for them to invest that money wisely so it can support them for the next 20–30 years.

Your situation may be different from Mr. and Mrs. C’s, but you probably have some of the same questions and concerns. It’s no longer important to explain why you’ve delayed saving for retirement; it’s just important that you get started now. Take a hard look at your situation. Cut back on spending and get in full-on, gazelle-intense saving mode.

Then, work with a professional who can help you answer the tougher questions like Should I sell my home? Where should I invest the money I’m able to save? How can I plan for medical expenses? What should my nest egg look like once I reach full retirement age?

With these questions answered and a solid plan to follow, you’ll have a more realistic picture of the kind of retirement you’ll have.