No retirement savings at 50? It’s not too late to start investing now

It’s not too late to learn about the basics of investing and build up a healthy retirement pot starting at 50, says Edward Sheldon.

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Having no retirement savings at 50 is not ideal. Yet it’s 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.

It’s not so surprising that many people reach 50 with no savings. Although we’re often told it’s important to save for retirement as soon as we begin working, when you’re in your 20s, 30s, and 40s, saving for retirement often doesn’t 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, you’re 50, and retirement is only around 15 years away.

Time to act

The good news is that at 50 it’s not too late to salvage your retirement if you act quickly. There’s 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) it’s 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 you’ll achieve this below).

Year £2,000 per year saved £5,000 per year saved £10,000 per year saved £20,000 per year saved
1 £2,000 £5,000 £10,000 £20,000
2 £4,140 £10,350 £20,700 £41,400
3 £6,430 £16,075 £32,149 £64,298
4 £8,880 £22,200 £44,399 £88,799
5 £11,501 £28,754 £57,507 £115,015
6 £14,307 £35,766 £71,533 £143,066
7 £17,308 £43,270 £86,540 £173,080
8 £20,520 £51,299 £102,598 £205,196
9 £23,956 £59,890 £119,780 £239,560
10 £27,633 £69,082 £138,164 £276,329
11 £31,567 £78,918 £157,836 £315,672
12 £35,777 £89,442 £178,885 £357,769
13 £40,281 £100,703 £201,406 £402,813
14 £45,101 £112,752 £225,505 £451,010
15 £50,258 £125,645 £251,290 £502,580

As you can see, no matter how much you’re able to save every year, whether it’s £2,000 or £20,000 per year, your money can grow quite a lot in the space of 15 years, if it’s earning a good return. That’s because the power of compounding starts to kick in, where you’re 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, it’s 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 won’t be able to get this from a savings account. To achieve a return of 7%, you’ll need to invest your money in a diversified portfolio of growth assets such as stocks or funds.

Know nothing about investing? That’s OK. There’s 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 you’ll 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, there’s 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.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

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