40s, 50s not too late to save for retirement

by Jack Lantis

for the Business Journal

If you're in your late 40s or early 50s and haven't saved a nickel for retirement, you may think it's too late to start. But contrary to what you might think, embarking on an investing plan now can go a long way toward providing a secure retirement.

Contribute to your 401(k). If your employer offers a 401(k) retirement plan, your contributions are not currently taxed, thereby reducing your taxable income. If you contribute the maximum $10,000 annually and are in the 28 percent tax bracket, that puts $2,800 more per year ($233 per month) in your pocket.

Many employers match a portion of your contributions, providing a built-in return.

Invest in a Roth IRA. Your after-tax annual contributions grow tax-free. Working individuals and nonworking spouses can contribute up to 2,000 per individual per year in a Roth as long as your individual income doesn't exceed $95,000 ($150,000 if married). Other restrictions apply.

Use dollar-cost averaging to buy stocks. This means you invest the same dollar amount at regular intervals into a specific investment, let's say growth stocks. This allows you to buy more shares when prices are low and fewer shares when prices are high. This doesn't guarantee profits or protect against losses.

(Jack Lantis is an investment broker with A.G. Edwards & Sons Inc. in Springfield.)