3 Mistakes to Avoid if You’re 50 With No Retirement Savings

No savings? No problem. While it’ll take some work, you can have some cash on hand by retirement by following these steps.

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The baby boomer generation had a lot of problems to get past when it came to making money. Stagflation, interest rates, and a recession are just some of the reasons why many might still be struggling with having some savings set aside. Those savings they do have may since have dwindled, especially if they haven’t been invested.

No one could blame a baby boomer given what the generation has been through if they decided to either invest in accounts with incredibly low returns, or not invest at all. But if you’re pushing 50 and still don’t have what you need for retirement, it’s time to get serious and take some action.

With that in mind, there are some things you’ll want to avoid if you’re hoping to retire in the next few years.

Spending beyond your means

If you don’t have savings for retirement, then you might as well consider yourself broke no matter what your paycheque says. That means the first place you need to get serious about saving is through your spending. This is where a lot of people tend to trip up. It might sound easy to just say you’ll stop eating out so much or buying clothes as often, but unless you make a real plan with some numbers next to it, those are just words and not actions.

So, first and foremost, take a look at your accounts and see where there is recurring spending that can be cut out and put that directly into a savings account such as a TFSA. That cup of coffee every morning, eating out for lunch, going out for dinner once a week, all this adds up and can seriously contribute to a savings account if you start looking at adding it in every month.

No automatic payments

Once you’ve figured out how much you’ll be able to save by cutting out these recurring expenses, don’t give yourself a choice. Put that money directly into your savings account by making automatic payments. In fact, you should also take this time to look at how much you can actually afford to put away if you live to your means. By seriously cutting back and putting that money away directly, that won’t give you the option to spend it. It sucks, but you’ll start seeing savings grow in no time. In fact, it shouldn’t take long to reach the yearly TFSA limit, so keeping those limits in mind as a goal towards your savings account is a great place to start.

Low returns

Just because you don’t want to see your savings fall doesn’t mean you have to invest in something with incredibly low returns. To be honest, the time for that is over. I’m not saying you need to pick risky stocks that could provide high rewards, but there are options that can provide the serious investor with significant gains over the long term.

In this case, I’d consider Toronto-Dominion Bank as a great option. If you’re 50, that leaves about 15 years to make some solid income before you retire. While that’s not a long time, TD offers a great chance right now to see some strong gains after the recession. The stock is trading below fair value and has a promising future due to its expansion into the U.S. and the wealth and commercial management markets.

So, if you’re able to put aside $15,000 now and add in $5,000 every year afterwards, that adds up quickly. If that investment is with TD, you’re looking at turning a total investment of $85,000 into $226,054.53 with dividends reinvested over 15 years. That would leave someone making $36,000 per year with about six years’ worth of income if they then didn’t add to that investment.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe owns shares of TORONTO-DOMINION BANK.

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