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Wednesday Welcome: 5 Tips for Retirement Investors Late to the Game

This week we welcome Dennis Miller, the author of Reboot Retirement and a RetireMentor at MarketWatch. He’s here to share a few solutions to a growing problem: As we start to have kids at a later age, our ability to save for retirement is pushed off and diminished. How do you bounce back? Read on below.

Dennis_Miller_4x4A major generational shift has taken place, and it’s having a huge impact on when and how we save and plan for retirement. Most older baby boomers had children in their 20s and empty nests by age 50. Between the ages of 50 or so and 65, we made a big retirement savings push.

I don’t need expensive research to confirm what I see with my own eyes: Couples are marrying and having children later in life. My oldest son just turned 50, and his two children are 14 and 12. He’s right in line with his peer group.

So let’s imagine a couple whose nest is finally empty at age 62. After that, it takes them three years to become debt-free, leaving just three years to stockpile money for retirement, if they retire at 68. This couple could save 100% of their salaries and still fall short.

So what can younger baby boomers do?

Start immediately. Younger boomers have to run a different race, but they still need to start now, regardless of other drains on their resources.

Make wealth accumulation a top priority. Every time you get a raise, most of it should go to paying off debt or to your 401(k) or IRA. If you’re not contributing the maximum amount to tax-preferred retirement accounts, start now.

Avoid the McMansion trap. Up until 2008, folks were buying the biggest house they could afford, because real estate was an “investment.” Houses weren’t just homes, they were moneymakers—or so we thought.

My son and his wife just bought a new house. They really liked another model that cost $25,000 more, but it would have been too big for them in 10 years or so. They made the right decision. They saved the $25,000 as well as the interest on a higher mortgage, since they had already made the maximum down payment they could afford.

Exercise common sense. I’ve made this mistake more than once: I’d get serious about diet and exercise and go way overboard, cutting my caloric intake in half and exercising to exhaustion. By the third day, my commitment would vanish. Had I paced myself, I would have been a lot more successful.

The same principle holds true for paying off debt and saving. For most folks, the best way to start is by withholding incremental amounts from their paychecks. Tackle debt the same way: cut up your credit cards and start paying a little extra on your regular payments.

Learn about investing now. It is easy to think, “Why do I need to learn about investing when I don’t have any money to invest?” I found that the more I read about investing, the more motivated I became to have money to invest. The thought of my money working for me instead of the other way around sounded quite appealing. After all, isn’t the goal to accumulate enough money and invest it wisely so we don’t need to work at all?

About Dennis: Dennis Miller is the author of Retirement Reboot, Senior Editor of Money Forever at www.millersmoney.com and a popular MarketWatch columnist. Miller’s Money is a research service with the goal of helping people reach their goal of a comfortable retirement.