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3 things to do if you’re in your 50s with no retirement savings

Let’s face facts. Somehow you’ve hit 50 without making any financial plans for retirement.

The good news is that it’s not too late. If you’re in good health and working, then you still have plenty of time to fix this.

Today I want to share a simple three-point plan to help you kick-start your retirement savings.

1. You deserve it

If you’re in your 50s, you’ve probably got a fair amount of experience at work. But it’s all too easy to get stuck in a rut. Does your boss appreciate you? Or are you underpaid for the work you do?

Asking for a pay rise can be hard. The secret to success is to have a strong case. Do some research. Find out what people in similar jobs are paid, at your company and others.

You might want to put out some feelers with a recruitment agency, to see if your skills are in demand elsewhere.

If you believe you’re being underpaid, then gather the facts, present them to your boss and ask for a pay rise.

If you’re self-employed, then consider whether you could raise your rates. It’s all too easy to charge the same rate for years, which effectively means you take a pay cut each year after inflation.

2. Save today, spend tomorrow

There are only two ways to increase the amount of spare cash you have for saving. The first is to increase your earnings. The second is to cut your spending.

By age 50, you may have accumulated a lot of financial clutter and some expensive habits.

Think about your spending. Can you cut back the amount you spend on cars, TV and phone contracts, holidays, meals out, clothes and gadgets?

What about spending on coffee and food at work? Expensive gym memberships, or other subscriptions that don’t get used? If you have ‘toys’ like motorbikes or a motorhome, ask yourself if they really get used enough to justify the cost.

Even small savings can have a big effect. For example, my sums show that £50 saved in a FTSE 100 fund today could be worth £158 in 15 years.

3. Make your money work for you

By now I hope you’ve got some spare cash ready to save each month. Here’s how I’d do this.

The first step is to make sure you pay yourself first. That means set up a direct debit to take your savings from your current account as soon as you get paid each month. If you wait to the end of the month to see how much you have left, you won’t save anything.

The second step is to make sure you won’t be paying any tax on your hard-earned savings. My preferred choice is to save into a tax-free stocks and shares ISA account.

Inside this account, I’d put a cheap FTSE 100 tracker fund. Set up your monthly payment so it’s automatically invested into this fund each month and buy accumulation units.

You may be surprised how quickly savings can build up. Based on the long-term average stock market return of about 8%, my sums indicate that a £250 monthly saving could be worth about £86,000 in 15 years’ time.

If you can save £500 per month, then you could have £173,000 by 2034. Make your money work for you today, and you could still retire in comfort.

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Roland Head has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.