When it comes to a sturdy and stable retirement portfolio, when you save seems to be important as how much you save.
That's no hyperbole, says Wells Fargo in its most recent retirement savings study.
The study points to a median savings of working Americans age 60 or older of $50,000, against a retirement savings goal of $300,000. "Yet working Americans age 55 to 59 have saved three times as much as those age 60 or older, having amassed $150,000 toward a retirement savings goal of $500,000," Wells Fargo states.
The reason for the disparity is clear: the report points out that the 55-59 demographic started saving way earlier (at age 31) than their 60-and-up counterparts (who started at age 37.)
"This study shows what a tremendous difference a few years can make when it comes to retirement savings," says Joe Ready, head of Wells Fargo Institutional Retirement and Trust. "Those who are not yet retired and working past age 60 started saving at age 37, six years later in life than those in their late 50s. The fact that people in their late 50s have three times the savings of those age 60 or older shows that starting early and saving consistently are key to retirement saving."
If you're in the latter group, and need to turbo charge your retirement savings, the "several years" mindset can work for you, as well against you in retirement planning.
"Just the fact that you know you need to make up ground is, in my mind, a positive sign," says J.J. Montanaro, a Certified Financial Planner with USAA, headquartered in San Antonio. "At least you're trying to evaluate where you stand and not just burying your head in the sand and ignoring the potential problem."
Montanaro advises retirement savers to revise their plan when they more money, and fast.
"This may mean working longer and downsizing your lifestyle now -- to free up money to save -- and later -- the fewer expenseses, the smaller the nest egg required to support your retirement," he says. "You should also carefully mapping out a plan to maximize Social Security benefits and perhaps overhauling your whole retirement vision. Having a workable plan can bring peace of mind."
Also, try to ramp up you're your savings plan.
"If you're behind, one fundamental way to make up ground is to look for every opportunity to bump up what you're setting aside for retirement," Montanaro adds. "Modifying your spending to free up room to take advantage of catch up contributions available to those 50 and older, selling property that no longer fits in your plan and using the proceeds to build your nest egg and aggressively directing every pay raise, promotion or 'found money' event to retirement savings are all examples."
For people close to retirement, it's tough to make up for lost time if they haven't been regular savers, or if they've had to make withdrawals from their retirement accounts along the way, says Scott Stratton, founder of Good Life Wealth Management, in Dallas.
"It certainly can help to save aggressively in their last five years before retirement, although they won't be able to reap the benefits of compounding that they could have enjoyed if they had saved earlier," Stratton says. "The first priority would be to maximize their 401(k) or other retirement plan and make sure they are using the catch-up provisions to the fullest. If you're in the 25% tax bracket, every $1,000 you can contribute is going to save you $250 in taxes this year, so your retirement plan is the best way to maximize your current saving dollars."
Outside of work, "short-termers" may be eligible to also fund a Roth IRA, or if they have any self-employment income (i.e. 1099 income), it's a good idea to fund a SEP-IRA. "Don't forget that your spouse may also be eligible for an IRA, even if he or she does not have earned income," Stratton says. "Check with your financial planner or accountant to make sure you aren't missing any IRA opportunities."
Stratton also points to some "low hanging fruit" for quick savings.
"Cooking at home more often instead of eating out can help save cash," he says. "Also, dropping cable for Netflix, losing your landline, comparison shopping your home and auto insurance which have a way of creeping up over time, planning your major purchases carefully and researching for the best available price which may be coming up on Black Friday. Also, hold on to your cars for longer; rather than getting a new car every couple of years, see if you can keep a vehicle for seven or more years."
If you're in a retirement savings jam, all of the above ideas should be in play to "catch up" on your savings. Don't waste a minute in applying them - you'll thank yourself later in your golden years."