I’m getting a super late start on retirement. I’m almost 60 years old. And I don’t really have any savings yet. I realize I’ve made a mistake, but I can’t go back and change anything now. Any advice to catch up?
Thanks for writing in. It’s always a pleasure to hear from our readers.
I just want you to know, you’re definitely not alone.
The good news is, you’re not retired yet.
So you do have some time to prepare yourself.
It might be a late start.
But late is better than never.
Before I begin dispensing with some resources, I want to note that I’m basing my feedback off of very limited information.
Other than what you’ve told me, I don’t know anything else about your situation.
Being married, having some kind of health condition, or even having access to a pension changes your dynamics and possibilities considerably.
My feedback will be only for you, and I’m assuming you’re otherwise healthy.
You’re not yet 60, Michelle.
That means you still have an opportunity to invest and get compounding working for you.
Compounding is an incredible force of nature.
But even just a few years can make a dramatic difference.
This is coming from someone who went from below broke to financially independent and retired in just six years.
I lay out the power of saving and compounding, even with just a few years at your disposal, in my Early Retirement Blueprint.
That’s a step-by-step guide to building the lifestyle, savings, and investments necessary to retire early.
I know that you’re not interested in retiring early.
But retiring early, normally, or late is all still retirement.
Regardless of what age you retire, the basic financial mechanics are similar.
So make sure to check out that Blueprint.
The investing portion of the Blueprint is built around dividend growth investing.
This strategy involves buying equity in high-quality companies that pay their shareholders reliable and rising cash dividends.
It’s an amazing investment strategy for retirement.
After all, if you don’t have your job anymore, you’re going to need to replace those paychecks with another source of income.
These dividends can actually be far superior to paychecks.
Dividends from high-quality companies are typically growing much faster than inflation – and certainly much faster than a lot of Americans’ paychecks.
Plus, I’d much rather rely on dozens of dividend payments than a paycheck from one just employer.
Take a look at my FIRE Fund, for example.
That’s my real-money early retirement dividend growth stock portfolio.
It’s generating the five-figure passive dividend income I live off of.
Because I own shares in more than 100 companies, I end up collecting dozens of dividend payments every month.
Just try that kind of payment schedule at work.
I’m relying on the fortunes of numerous companies across many industries.
That beats relying on only your employer.
Trust me, you’re expendable at your job. At the first sign of trouble, you could be let go.
But shareholders don’t get fired.
That’s the kind of warm-and-fuzzy knowledge I like, particularly in times of economic difficulty.
Make sure to read through fellow contributor Dave Van Knapp’s Dividend Growth Investing Lessons for more on all of this.
His series discusses what this strategy is, why it’s so effective, and how to successfully implement it.
You can find more than 800 US-listed stocks that have raised their dividends each year for at least the last five consecutive years by perusing the Dividend Champions, Contenders, and Challengers list.
Now, that’s the investing side of things.
But you need money to make money.
This is why savings is so important.
With your limited time frame at your disposal, you’ll definitely have to consider making some major lifestyle changes.
I’m assuming that your lifestyle includes little room for savings.
Otherwise, you would have already built up investments with your savings.
Maybe you can downsize your living space. Contemplate living without a car. Take a good look at your spending on food.
Most Americans spend a disproportionate amount of their income on what I call “the big three” – housing, transportation, and food.
That’s why it’s important to tackle these areas of your spending.
Reducing your spending in these key areas means more capital for investment.
Plus, you’d then need less income to live off of in retirement.
It’s a win-win!
Closing that gap between passive income and expenses as fast as possible should be your aim.
And working on both sides of the equation – income and expenses – works to your advantage.
The lifestyle choices are really up to you, Michelle.
For instance, I publish a compelling long-term investment idea every single Sunday.
You can find these ideas in the Undervalued Dividend Growth Stock of the Week series.
I only highlight ideas of off of the aforementioned CCC list.
And I only put them forth when they appear to be especially convincing, based on fundamentals, competitive advantages, and valuation.
You’ll have Social Security, Michelle.
It’s likely that you’ll have to build the bulk of your retirement income around this.
I’m not sure how much you’re entitled to.
But the average monthly benefit for 2019 is just over $1,400 per month.
Doing what’s necessary right now to supplement that is a great idea.
However, you might find that it’s still tough to make ends meet.
In that case, you might have to delay retirement and work longer than you had planned.
Also, picking up a part-time gig of some kind after you quit your job is a great possibility.
Finally, you might even want to take a look at retiring abroad.
I personally moved to Thailand more than two years ago.
My lifestyle runs about 1/3 the money here compared to America. That makes things much, much easier.
Mexico, for example, could be a great location that’s much closer to the States.
No matter what you decide to do, Michelle, I’ll leave you with my best piece of advice.
I wish you luck and success.
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