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Catching Up on Retirement Savings

Question: I have a unique "problem" when it comes to planning for my retirement. In my early 20s, I struggled to overcome a life threatening illness. In my 30s, I was only able to work part time. I also went through a financially debilitating divorce. Now, I am in my late 40s, healthy and 10 years into good career. However, because of my health I had no chance to save any money. Though I'm thrilled to be alive, I realize that I may face a bleak retirement. Where do I start? Marianna. Liberty. NY.

Answer: I'm glad that you're now healthy and enjoying a good career. While the particulars of your situation are unique to you, you'd be surprised how many people in their late 40s are in similar financial circumstances when it comes to retirement savings.

There's no reason why your retirement should be bleak. Yes, you're starting late with your savings. That means you'll have to try and salt aside more going forward. There's no getting around it.

Even more important is the demand on you to plan ahead. Specifically, you'll need to work longer than someone who has been savings the maximum every year since she was 20. The real financial kick comes from working during those years when a number of your peers are retiring. That's not necessarily a bad thing, either. For many of us, work isn't just a paycheck. It's also a social environment with colleagues and friends. Work keeps our minds active and our outlook young.

A couple of "investment" implications follow from this: First, invest in your health. Eat right and exercise. Second, invest in your network--colleagues, friends, and acquaintances. This way, if you lose your job other opportunities will open up to you. And if you want to make a career shift your network will help make it happen. Third, invest in your job and career. Is this something you'll want to do in your 60s. If not, start investigating other options now while you're still young. Finally, invest the time to understand your Social Security benefits.

I've recommended this book before, Get A Life by Ralph Warner. It's for anyone without a lot of savings and plenty of zest. Warner gets you thinking about creative solutions for your later years. The book's sub-title says it all: You don't need a million dollars to retire well. Amen to that, no?

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