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Published: Apr 15, 2022 5 min read
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You’re not alone if you think you can be too old to start saving for retirement. Nearly half of Americans feel this way, according to a recent survey commissioned by Human Interest, a retirement benefits provider.

The study polled more than 2,000 Americans: Half between the ages of 18 to 29 and half between 30 to 64. Out of the latter range, 47% said it can be too late to start saving. And 46% of those between the ages of 18 to 29 also believed you could run out of time to save.

While the survey didn't specify when respondents believed the cut-off was, any belief that it's too late to save can be damaging, financial advisors say. Many financial experts believe that regardless of age, something saved is better than nothing.

“Better late than never,” says Brent N. Bruggink, director of retirement plan services at CG Financial Services in Williamston, Michigan.

“If you’re at the lower end of a 30 to 50 year range, you’d still have 20 to 30+ years to invest for a successful retirement," says Bruggink. "Even if you’re 50+, you could possibly have 10 to 20 years of retirement investing.”

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The benefits of saving for retirement now

No matter what stage of life you’re in, there are plenty of ways to start saving for retirement now. According to the survey, half of respondents save for retirement through their checking accounts or savings accounts. However, most checking accounts don’t pay interest on your money. And the average interest rate for a savings account is 0.06%, according to the FDIC. Even the best high-yield savings accounts currently pay only around 0.50%.

On the other hand, the average annualized return of the S&P 500 — an index that tracks stocks of America’s largest companies — for the past 10 years was 13.6%, according to data gathered by Goldman Sachs.

Investing can be daunting, especially with constant reminders of market volatility in the news. But it pays to weather the storm.

“Market crashes happen, but stocks eventually recover," says Alvin Carlos, managing partner at District Capital Management, a financial planning firm in Washington, D.C. “And in the meantime, you’re able to buy stocks at a bargain price.”

Bruggink says that some individuals closer to retirement may need to invest more aggressively in an attempt to make up for lost time. So they may need to place a higher allocation to stocks than their counterparts with ample savings. Regardless of age, a well-diversified portfolio can help you meet your personal goals.

And you don’t need a workplace retirement plan such as a 401(k) to build a diversified portfolio. You can open an individual retirement account (IRA) on your own and get many of the same benefits.

A traditional IRA lets you make tax-deductible contributions to your account. That means it can lower your tax bill or increase your tax refund. Lower income savers may also be eligible for a saver’s tax credit. The money in your IRA grows tax free until you make eligible withdrawals at the age of at least 59.5. But be careful to not dip your hand in the cookie jar early. That can mean stiff tax penalties. As an alternative, you can trade tax-deductible contributions for tax-free withdrawals in retirement when you open a Roth IRA.

For 2022, individuals who are at least 50-years-old can contribute an additional $1,000 to their IRA or Roth IRA for a maximum of $7,000.

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How to open an IRA

Generally, you just need to have earned income, be at least 18-years-old and have a Social Security number or tax ID number to open an IRA or Roth IRA.

You can open an IRA online through most banks or investment management companies such as Fidelity Investments, Charles Schwab or Vanguard.

So after you’ve decided where you want to open your IRA, you generally follow these steps.

Choose the type of IRA you want: Your options typically include traditional IRA or Roth IRA.

Fund your account: This usually involves linking a checking account from which you’ll contribute money to your IRA.

Choose your investment options: Most IRA providers let you invest in virtually the entire securities world. This includes stocks, bonds, ETFs, mutual funds and even cryptocurrency in some cases.

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