As you consider entering into your ‘golden years,’ you likely have a number in mind you would like to reach for retirement savings. You may also be asking yourself: How much is enough? Will that amount always be enough? Will I ever have enough? Perhaps you have set your financial finish line at $1 million or $5 million. Whatever the number, it is important to ask yourself, are you on track? If you are not sure, you might need to hurry and catch up.

According to CNBC, nearly half of Americans are behind on their retirement savings goal. Keep in mind that there are two main factors in successfully saving for retirement—time (both time to save and time in retirement) and amount saved (both currently and before you retire).

We all know the earlier we start saving for retirement, the more we can save toward that $1 million goal. If you waited until age 30 or 40 to begin saving, you no longer had time on your side for additional savings and, more importantly, for the compounding of your investment returns over time. If you delay your retirement savings program, you are forced to save larger amounts over a shorter period of time up to your retirement date. If you believe you have yet to save enough for your golden years, let us explore two ways to catch up for retirement, assuming time is no longer on your side.

401(k) Maximums / Catch-Up Rule

If you have a 401(k) plan through your employer, you could ensure that you are deferring the maximum amount of $18,500 per year. Additionally, if you are over 50 years of age, do not forget about the “catch-up rule,” allowing you to put in an additional $6,000 annually in your 401(k). Many forget about this rule, which allows you to sock away quite a bit of extra money.

If you cannot defer the entire extra $6,000, do what you can to take advantage of at least a portion of that $6,000 catch-up if you over age 50. In addition to your 401(k), you could also utilize a Roth IRA to contribute more funds. There are phase-out income limits and other guidelines, so ask a financial professional at Semita Asset Management if you qualify for a Roth IRA. Whichever account you use, we advise you to seek professional counsel on which investment securities or funds to select in your accounts. If a 401(k) is not an option, keep reading for more ways to catch up on retirement savings.

Self-Employed / Business Options

Let us assume that putting in $18,500 each year into your employer 401(k) is not an option. Perhaps you have bills to pay, like most, and cannot contribute the full amount. Perhaps you operate a small business and do not have a 401(k) available to you. Fortunately, even when you are self-employed, you can take advantage of certain plans and incentives. Many people already do side jobs or some sort of work that is already considered a business as a sole proprietor. Below are three retirement plans that a small business owner can utilize:

  • Individual 401(k)
  • SEP IRA (Self-Employed Pension)
  • SIMPLE IRA (Savings Incentive Match Plan)

Several of these small business retirement plans allow you to save a substantial amount of funds each year, generally up 25% of your income or $55,000. A Simplified Employee Pension (SEP) IRA is perhaps the easiest to set up since it requires minimal paperwork and reporting. SIMPLE IRAs have lower contribution limits but do allow employee deferrals if your small business has employees. Ask a financial professional at Semita which plan would be right for you. Clients who engage with a Semita Asset Management can take confidence in the fact that we will walk beside them as they invest wisely, help them manage their investments, and consult with them through market cycles.

Other Ways to Catch Up

If you do not have a business as your main source of income or side job, maybe it is time to start something in your spare time. Start an online shop of some kind, or flip items on eBay or Craigslist. Maybe even start a local business such as landscaping or home improvement business. Whatever your plan is, just know that a large portion of that extra money should be put away in the previously mentioned plans to catch up for retirement.

It is our strong belief that everyone can benefit from having a financial counselor in their lives. In Proverbs 15:22, King Solomon writes that “Plans fail for lack of counsel, but with many advisors they succeed” (NIV). This is certainly true of your finances and planning for your golden years. When you work with us to create and implement your financial plan, we walk alongside of you as you consider what your objectives might be for the coming years. Once you have defined the needs and wishes that you have for the future, we create a customized plan for you as you seek to achieve your goals, and we implement an investment strategy catered to help you meet your objectives.

I am always open to meet new people and to see how I may be able to help. Whether you have already started planning for the future or have yet to put strategies in place, I encourage you to reach out to me today for a no-obligation conversation to see how I may be able to help you. Click here to book an appointment online!

About Michael

Michael Meagher is the Chief Executive Officer and Chief Investment Officer at Semita Asset Management LLC with more than 46 years of industry experience. He specializes in providing strategic, goal-based financial planning, risk management, retirement planning, and portfolio management services. Michael graduated from the University of Houston with an MBA in finance and holds both the Chartered Financial Analyst (CFA®) and Certified Kingdom Advisor (CKA®) designations. Learn more about Michael by connecting with him on LinkedIn.

*The designation of Chartered Financial Analyst [“CFA”] is conferred by the Chartered Financial Analyst Institute, Charlottesville, Virginia The CFA candidate must meet the following requirements to be eligible for the designation:

1) Possess of an undergraduate degree plus four (4) years professional experience involving:

  • Evaluating or applying financial, economic, and/or statistical data as part of the investment decision-making process involving securities or similar investments, which includes, but is not limited to, publicly traded and privately placed stocks, bonds, and mortgages and their derivatives; commodity-based derivatives and mutual funds; and other investment assets, such as real estate and commodities, if these other investment assets are held as part of a diversified, securities-oriented investment portfolio; or
  • Supervising, directly or indirectly, persons who practice such activities; or
  • Teaching such activities, and

2) Successfully complete a study program that culminates with three (3) levels of examination each of which requires approximately 250 hours of study and preparation. The CFA Institute has a non-mandatory, or voluntary, program regarding continuing education requirements for the CFA charter holder.

**The designation of Certified Kingdom Advisor® [“CKA”] is conferred by Kingdom Advisors, Atlanta, GA The CKA candidate must be a disciple of Christ who has committed to be a person of character who, from a biblical worldview, serves clients with biblical financial advice in order to properly steward the resources entrusted to them. Kingdom Advisors has created the Certified Kingdom Advisor® designation to provide confidence to those looking for financial counsel from a biblical perspective. The Certified Kingdom Advisor® designation is given to advisors who:

  • Complete the Kingdom Advisors’ Core Training
  • Provide evidence of their technical competence
  • Commit to personal stewardship
  • Assert their belief in Jesus Christ
  • Provide evidence of their personal integrity
  • Commit to incorporating biblical wisdom into their financial advice