Building Wealth Later in Life Can Be Done - These Tips Will Make It Easier

Maybe you remember the 1972 Liza Minnelli song "Money Money," where she sings, "money makes the world go round." She sang that whether it was a mark, a yen, a buck, or a pound, money made everything happen.

Money makes the world go round. Whether you like it or not, this is the universal truth—money can, to an extent, buy your way into a happy life. Money encompasses all aspects of our lives. There are even songs and movies about money. 

As such, people are taught to start saving at a young age. In an ideal world, you'd be able to set aside enough for your future and enjoy your savings when you grow old. Unfortunately, this isn't usually how things are.

Saving sounds like an easy concept to learn, and it is! But, doing this in real life is quite challenging. Life is as unpredictable as it is beautiful—you never know what may happen. Given life's unpredictability, meeting one's financial goals could be impossible.

The Challenges of Saving Money

If saving money were easy, no person would have financial problems in their old age. With 22% of adults in the U.S. having less than $5,000 saved for retirement, while another 15% have no retirement savings at all, retiring without savings seems like a common problem.

Indeed, life is full of roadblocks preventing one from achieving financial security. These obstacles may derail a person's desire to save or keep them from saving money even though they wish to do so!

On the bright side, you can overcome these challenges if you know how to. But the first step is to identify the financial obstacles so that you can save your way to a secured future. Here are some common financial obstacles people face:  

·         Spending More Than You Can Afford

Of course, you deserve to spend the money you worked hard to earn. However, you must not only focus on the present—it's also crucial to keep the future in mind. This is what many people have trouble realizing. As a result, they end up dealing with a large amount of debt they must pay for until after retirement.

·         Failing to Set Up a Budget

The path toward your financial goals will be long and thorny. So, you need to create a budget to guide you through your financial journey. Unfortunately, few people realize the importance of budgeting, especially for small expenses. This leads to bad decisions and an empty bank account.

Your budget is your friend. When you set a budget for yourself, you'll be more conscious of your expenses and meet your savings goal!  

·         Using Credit Cards Carelessly

Although credit cards provide a way to build credit and pay for expenses, they are also prone to misuse. Credit cards can serve you well when you know how to use them. If not, you could carry a balance and pay high-interest charges.

Overall, Americans owe $807 billion across almost 506 million card accounts. If you're one of those accounts, it may be time to rethink how you use your credit card.

In many cases, people fail to save up for their retirement, resulting in having to deal with a heavy financial burden without a regular source of income.

At this point, some may give up and think building their wealth is hopeless. But is there really no chance of achieving one's financial goals later in life?

Saving Up: An impossible Dream?

Building wealth with debt is undoubtedly tricky. In fact, some may even say that this would be an impossible task! With your youth behind you and no stable job, what chances would you have of living comfortably into your later years, much less building generational wealth?

Such is life, right? Well, what if we told you that there is hope? Building wealth later in life will present some unique challenges, but nothing you can't overcome. If you want to find out how to get started, follow these tips:

·         Fewer Expenses, More Savings

As with any age, building wealth during your later years involves having to save less and save more. You don't have to make significant cuts immediately—start slowly and find small ways to reduce your total expenses daily.

For example, you can start making your own coffee rather than buying an expensive new one at a coffee shop. Switching to a different brand of item that is of equal quality can also help you save more. The next thing you know, you've mastered the art of saving and have more money in your bank account than in recent years!

·         Diversification Is Key

While saving up is instrumental in helping you reach your financial goals, you can't get there faster without making the right investments. At your age, investing is crucial to earn, but to get great results, make sure to diversify!

By spreading your investments around, you'll have limited exposure to any one type of asset. As a result, you'll be able to reduce the volatility of your portfolio over time.

·         Downsize For Your Future

Some people begin rethinking their lifestyles right when they begin to struggle financially. But did you know that you can also downsize before waiting for something bad to happen? 

Downsizing isn't always an indication that one is struggling financially—it could also indicate that you're serious about saving money. Your new lifestyle will probably take some getting used to, but you'll thank yourself for making this decision in the future. 

Unplanned Health Expenses 

Even those with savings and well-positioned for their future retirements often forget one of the biggest risks we face as we get older, the need for long-term health care. The federal government reports that about half of us who reach age 65 will need help with daily living activities or supervision due to dementia. 

Many people are unaware that health insurance, including Medicare and supplements, will not pay for long-term health care beyond 100 days of skilled services. Medicaid will only pay for long-term care services when someone has little or no income and assets.

Long-term health care costs are skyrocketing for many reasons. Because of increasing demand for care, inflation, and higher labor costs, these costs will continue to rise sharply in the decades ahead. 

Self-funding future long-term health care is not the ideal plan since you never know when you may need care nor what the economic environment happens to be at that time. If you need care during a market correction, you might have to sell off assets at a loss. Often, the loss is still a taxable gain.

Not only would you be using your own money to pay for expensive care, but your family would also have the burden of deciding which asset to sell and what type of care you would receive. 

Many families decide to add a Long-Term Care Insurance policy to their retirement plan. While nobody wants to add another insurance bill to their budget. However, the guaranteed tax-free benefits will safeguard income and assets and reduce the stress and anxiety placed on loved ones. 

Partnership Long-Term Care Insurance plans offer additional asset protection on top of the benefits available from the policy. Most people obtain their coverage in their 50s.

Final Thoughts

Even if you think you were dealt a poor hand, you can do something about your financial predicament and thrive, even throughout your retirement years! Anyone can save up to save their future and build wealth that they and their succeeding generations will enjoy. 

A financially secure tomorrow is within reach with the right attitude and practices.