Having no retirement savings at 50 is not ideal. Yet its a situation that many people across the UK find themselves in. According to a study by Mintel last year, one in five British adults have no savings for retirement at 50.
Its not so surprising that many people reach 50 with no savings. Although were often told its important to save for retirement as soon as we begin working, when youre in your 20s, 30s, and 40s, saving for retirement often doesnt feel like a big priority. Retirement can seem a long way off, and other expenses can get in the way. However, the years can disappear quickly. Before you know it, youre 50, and retirement is only around 15 years away.
Time to act
The good news is that at 50 its not too late to salvage your retirement if you act quickly. Theres still time to save plenty of money and, more importantly, learn about the best ways to invest it so you can earn a good return on your money. With a timeframe of 15 years or so (assuming a retirement age of 65) its possible to build up a nice little nest egg.
Below, I look at how much you could potentially accumulate with a regular savings and investment plan, if your money is growing at a healthy rate.
Regular savings can grow quickly
The table below looks at how certain levels of savings could grow, assuming an annual rate of return of 7%* (more on how youll achieve this below).
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As you can see, no matter how much youre able to save every year, whether its 2,000 or 20,000 per year, your money can grow quite a lot in the space of 15 years, if its earning a good return. Thats because the power of compounding starts to kick in, where youre earning a return on your past earnings. If the money was kept in a cash ISA, however, earning 1% or so, the end figures would be nearly 40% lower than the figures in the table above.
Learning the basics of investing
If you have no savings at 50, its also important to learn about the basics of investing, sooner rather than later.
The table above assumes a growth rate of 7% per year. Unfortunately, you wont be able to get this from a savings account. To achieve a return of 7%, youll need to invest your money in a diversified portfolio of growth assets such as stocks or funds.
Know nothing about investing? Thats OK. Theres still plenty of time to learn about how the stock market works, and become familiar with concepts such as dividends and mutual funds.
The best place to start is probably a book that covers all the investing basics just search for investing for beginners on Amazon and youll find plenty of options. You can also pick up plenty of fantastic insights for free from websites such as The Motley Fool.
Having no retirement savings at 50 is not ideal. But if you act quickly, theres still time to turn things around and build up a retirement portfolio. The key is to educate yourself about the basics of investing, and then put a regular savings and investment plan into action to grow your money.
Do you want to retire early and give up the rat race to enjoy the rest of your life? Of course you do, and to help you accomplish this goal, the Motley Fool has put together this free report titled “The Foolish Guide To Financial Independence”, which is packed full of wealth-creating tips as well as ideas for your money.
The report is entirely free and available for download today, so if you’re interested in exiting the rat race and achieving financial independence, click here to download the report. What have you got to lose?
