Overcoming inertia to save for retirement

Procrastinating Pete: Late to the game
Procrastinating Pete: Late to the game © Goodluz/

"Procrastinating Pete" is not alone. Nearly 3 out of 10 retirees say they didn't start planning for retirement until they were within 10 to 19 years of retiring, according to EBRI's 2013 Retirement Confidence Survey.

No matter how far behind you are, don't give up. Instead, buckle down -- pronto.

Increase savings. This year, you can save up to $17,500 in a 401(k), plus $5,500 more if you're at least 50, for a total of $23,000. In addition, IRA contribution limits are $5,500 ($6,500 for those 50-plus). If you're 50-plus and you maximize contributions for both the IRA and workplace plan, you can amass more than $1 million in 20 years, assuming a 6 percent annualized return.

Save smarter. A Roth IRA is often a great option for late starters because you can leave assets in them as long as you like. Plus, when you do withdraw new earnings after the account has been open five years and you're 59 1/2, the money is tax- and penalty-free.

Consider converting. If you have an IRA, you can convert it into a Roth IRA, but you'll pay taxes. Is it worth it? It may be if you have at least 20 years before retirement.

Delay Social Security. You can start collecting Social Security as early as 62, but it pays to wait. A monthly Social Security benefit worth $1,000 when you're at full retirement age will be reduced to $750 if you collect at 62. Wait until you're 70, however, and you'll get $1,320.


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