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If you've forgotten to save for your retirement, then you're facing an incredible uphill battle when it comes to your financial future. The longer you wait to get started, the tougher it is to amass enough in cash and investments to last you the rest of your life.

Yet few of us managed to fully fund our IRAs with the money we earned from our summer jobs as teenagers. For real people who are starting to invest later in life, time may not be the ally it once was, but there are still ways to achieve a comfortable retirement from a delayed start.

First, plan to invest
No matter how little working time you have left, you should be investing. Even if retirement is just around the corner, remember that you're not just socking away cash for the day you retire, but rather looking for money to help get you through the rest of your life. The general rule is that you shouldn't have money that you'll need to spend within five years in stocks. But if you're healthy, you'll likely live more than five years in retirement and should invest accordingly.

While the nest egg you'll be building is always nice to have, the real payoff for you at this point is the discipline enforced by putting yourself in the position to invest. Doing so will help you clarify what parts of your lifestyle are really important to you and which ones you're willing to live without.

Next, understand your priorities
As a later starter, it will be tougher to get to the point where your nest egg will cover your total current costs of living. In fact, it may well be impossible. As a result, you will be best served by figuring out what really matters to you and working toward a retirement that provides for your top priorities. For everything else, remember that retirement can also mean giving up the rat race, but not necessarily giving up all semblance of a paycheck.

For instance, you'll need a place to live, of course. But once your kids are grown and on their own, do you have to stay in the same home where you raised them? Downsizing your living arrangements can free up cash currently trapped as equity in the home, lower your monthly expenses, and enable the rest of your nest egg to stretch further.

Likewise, does retirement have to mean you're completely done with working? Could you go part time or perhaps switch to a not-for-profit employer where your pay may decrease, but so would your stress? The general rule of thumb is that you can safely spend 4% of your assets in retirement annually. Flip that around and it means that every dollar you earn annually represents as much as $25 you didn't need to sock away.

Then, set your target
Using that same 4% safe spending guideline, you can figure out how much you need to sock away to have your nest egg cover your living expenses. The table below shows how much you need to save each month (and at what return rate) to have your investments produce $1,000 of annual cash for your retirement:

Years to Go

4% Annual Return

6% Annual Return

8% Annual Return

































So, for instance, assume you have 20 years until retirement and need your nest egg to cover $15,000 per year of expenses. You'd need to invest $636.60 ($42.44 * 15) per month at an 8% return or $1,022.40 ($68.16 * 15) per month at a 4% return to reach that goal.

Remember, too, that the money you put away won't have to necessarily cover your entire current costs of living. Not only can you make priority calls to reduce your expenses, but remember that even under the worst likely scenario, Social Security will pay something if you've earned benefits.

Finally, work your plan
Once you've determined where you'd like to be when you're ready to retire, the rest is largely a matter of executing against your plan. But to have a chance of earning anywhere near the upper end of those returns, you need to invest a decent part of your money in stocks.

Remember that in spite of this current mess, over the long haul stocks have been an incredible source of wealth generation. And since you're looking for your retirement nest egg to help fund the rest of your life, your anticipated time frame should extend well past your expected retirement date. That makes you a potential long-term investor, so you need to balance your near-term need for income (bonds, cash) with your long-term need for growth (stocks).

The easiest way to own stocks is to buy shares in a broad index fund, such as the S&P Depository Receipts, which track the S&P 500. Doing so gets you an investment in 500 large, and in large part successful, companies such as these:


Fraction of S&P 500

Trailing Earnings
(in Millions)

Dividend Yield





















United Parcel Service(NYSE:UPS)




American Express(NYSE:AXP)




Get started now
At Motley Fool Rule Your Retirement, we want to help you ensure your golden years are as golden as possible. But the longer you wait, the tougher it will be to reach a comfortable retirement. If you've missed saving during the early years of your career, then you really should join us today to get started maximizing the compounding power of the working years you have left. To help you begin your journey, take the next 30 days to try us out free. Simply click here to get started.

At the time of publication, Fool contributor Chuck Saletta owned shares of American Express. American Express and Pfizer are Motley Fool Inside Value picks. PepsiCo and United Parcel Service are Motley Fool Income Investor recommendations. The Fool has a disclosure policy.

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Read/Post Comments (6) | Recommend This Article (46)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 15, 2009, at 2:09 AM, PsycheDaddy wrote:

    It's better to never stop investing. No matter what you come across, if it's a good deal and can easily be marketed, buy it. No matter what you age. My father invested up to the day he died, 83. Set down in his recliner and went to sleep then never work up.

    When or if you go to a nursing home, then quit.

  • Report this Comment On February 09, 2011, at 10:13 PM, personalwm wrote:

    The sooner you start investing the better. Even small amounts will nicely compound over long periods.

    If you start later in life, you can still do well. But it will require additional focus.

    I suggest that you create a formal Investment Policy Statement that outlines your financial situation, objectives and constraints, risk tolerance, investment strategy, etc. Having a plan in writing may make it more attainable than simply taking a spontaneous approach.

    Given the shorter time you may need to adjust down your wealth accumulation goals. Be realistic in your planning.

    Or you may need to increase your risk appetite in an attempt to attain higher returns.

    You also may need to reevaluate your spending habits to try and find additional disposable income to allocate to investments.

    For more investment information, please visit

  • Report this Comment On February 23, 2013, at 4:55 AM, Urhojuhaniuljas wrote:

    Minä en osaa kommentoida mitään. kun en ole mistään tietoinen. En ymmärrä sijoittamisesta mitään, siis en ymmärrä mitään.

  • Report this Comment On March 31, 2013, at 11:52 AM, 5talentsfinance wrote:
  • Report this Comment On December 10, 2014, at 10:18 AM, WickedWillie wrote:

    You’re never too old to start investing, although you could always be too young to start benefiting from doing so.

  • Report this Comment On December 27, 2014, at 7:29 AM, WickedWillie wrote:

    Invest in the future: you’ll be dead before you know it!

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