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At 55 – Is it Too Late For Retirement Planning?


During my day job (J), I meet many clients to look at their personal finances. More precisely, my mandate is to create financial plans and help clients with more than $250,000 invested with the bank. So, most of them are in their 50s. Unfortunately, I come across a lot of people who don’t have a financial plan and have never discussed retirement planning. At one point, it’s like they feel that it’s too late or they are too ashamed to talk about retirement planning. Like most things we don’t like to do, we all hope that time combined with magic and prayer will take care of our retirement planning ;-).

So if you don’t have a plan at 55, is it too late for retirement planning?

The quick answer is no (especially since you might not even retire at 65 [2] but perhaps closer to 70 or 75 😉 ). However, some things may need to change if you want to have a comfortable retirement:

Look at reality

The very first thing is to look at your net worth, your budget and how much you are saving in your retirement account right now. Like an alcoholic, you need to acknowledge that you have a problem before starting to solve it ;-).

Once you have your statements in order, make an appointment with a financial advisor that is able to create a retirement plan. He will key your information into his software and be able to tell you about how much you have to spend annually during your retirement years. Warning; this will be a reality check!

Make a real effort

Some people talk for years about the day they will stop smoking while others don’t say a word and just do it. This is similar to retirement planning. Making a genuine effort will be the key point in your plan. It will hurt, I swear it will. Therefore, you will have to bite your tongue and put the damn credit card away if you want to pursue your dreams.

Change your lifestyle

Instead of living in a state of constant frugality (read frustration), you can deliberately decide to change your lifestyle. Instead of cutting out things, try doing things differently. Don’t cut out your morning coffee from Starbuck’s, but bring it from home. Eat out only once a week and bring nice meals instead of a stupid sandwich in your brown bag ;-). Consolidate your debt, look for lower interest rates (transfer your balance on a 1.99% credit card [3] 😉 ). By slowly changing your habits, you will see the difference of making progress in your retirement plan without being frustrated.

Don’t be a gambler

The temptation is great but you must resist. If your financial advisor does a projection at 7, 8 or 9% returns, don’t buy his BS. If you try to invest seeking the equivalent of a home run, you will more likely end-up striking out. Invest steadily with good investment strategies instead of trying to find the next RIM or the next mining company about to explode. This will only distract you from your original retirement plan and delay you ability to retire.

Respect your asset allocation and retirement plan

Making efforts, avoid gambling and establishing a retirement plan is only good if you stick to it and follow it to the letter. Review your retirement plan once a year to make sure you are making progress and that you are not late. Doing this exercise once is not enough, you need to revise your retirement plan annually ;-).

If you want to learn about how to find a good financial advisor, try this series I wrote a while ago:

How to find a good financial advisor [4]

And if you are looking for asset allocation advice, I am currently writing a series over at Green Panda:

Asset allocation basics [5]

Image source: boliston [6]

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14 Comments (Open | Close)

14 Comments To "At 55 – Is it Too Late For Retirement Planning?"

#1 Comment By IntelligentSpeculator On June 23, 2010 @ 9:02 am

How did these individuals manage to get 250,000$ invested without a retirement plan? That is impressive…I know I could not do it without a plan…

#2 Comment By BMSP On June 23, 2010 @ 9:04 am

So once you are 55 years old and have 300K saved up, what is the first step?

#3 Comment By The Financial Blogger On June 23, 2010 @ 9:29 am

If you are making 100K + per year and you simply do your RRSP contributions to the maximum, you will get to $250K quickly enough 😉

The problem is that you can reach the 250K mark much faster with a plan!

#1 determine at what age you want to retire
#2 determine which kind of lifestyle you want at retirement (how much money will you need per month)
#3 meet with a financial planner to do projections to see if you are on track 😉

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#5 Comment By Financial Cents On June 23, 2010 @ 7:31 pm

Hey FB – I think if you are 55 and do not have $250 K in the bank, then yes, it is too late.

You are assuming folks that are 55, have this type of money, and such, they often become your clients; which is a great thing, don’t get me wrong. I don’t think it’s too difficult to get them into some financial plan and you probably always do.

I think the much harder challenge would be to get the 55-year-old that doesn’t have $250 K into some plan and VERY quick, otherwise, their only hope is CPP and OAS.

#6 Comment By The Financial Blogger On June 24, 2010 @ 9:03 am

@Financial Cents,

I agree with you that there are a lot of Canadians counting on CPP and OAS to live at retirement. This is definitely a problem. However, even those people, if they start saving money at 55, they will be able to enjoy a more comfortable retirement.

On the other side, since they never spent 40K/year to live, they don’t need to have 500K to 1M$ at retirement.

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#8 Comment By Sam On June 25, 2010 @ 1:39 am

@TFB: This is really interesting.. But isn’t 55 a bit late to start planning for retirement? I am in my late 20s and I would like to start setting aside money for my retirement once I reach the age of 30. What age do you think is best to start planning for one’s retirement?

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#10 Comment By The Financial Blogger On June 25, 2010 @ 8:22 am

@ Sam,

55 is definitely late to start thinking about retirement planning. However, it is never too late to put a few bucks aside.

if you think about retirement planning at the age of 30, you will surely be able to build a nice safety nest and live a comfortable retirement!

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