How This Investor Went From Being 50 Years Old With No Savings To A Comfortable Retirement At 65

Most people have heard the saying "better late than never," but it has an entirely different meaning when you're 50 years old and have no money saved up for retirement. It's a difficult situation, but it doesn't have to be the end of the world. GOBankingRates recently profiled an investor who got themselves out of this unenviable situation by committing to lifestyle changes, ambition, and astute planning.

Admitting you have a problem is the first step to getting out of any difficult situation. Once that's done, the next step is making a plan. That's exactly what Jennifer James did when she realized she was dangerously close to retirement age with inadequate savings. Saving money sounds like it's easy, but it can be challenging when your employment income doesn't leave you with enough discretionary funds to stash any away for a rainy day.

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That's why James' first step was improving on their $45,000 per year salary. "I knew I had to increase my income, but without a college degree, I felt stuck. I was living paycheck to paycheck just trying to get by," James told GOBankingRates. She followed the advice of several confidants by returning to school to earn her bachelor's degree. It was a struggle, but the payoff was worth it.

Getting her bachelor's degree allowed James to secure a job as an office manager and boosted her annual salary to $65,000.  "Finally finishing my degree opened up new opportunities that changed everything," she said. "It was a struggle, but well worth the effort." By that point, James was 53, but she had the discipline to begin putting her extra income to work for her.

James told GOBankingRates that she began saving 20% of her take-home pay, a move that allowed her to stockpile investment capital and build an emergency fund. "I set up automatic transfers from my checking account to savings so I paid myself first," James said. She admitted living on such a tight budget was a challenge, but the reward made all the sacrifices worthwhile.

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According to GOBankingRates, James' next step was to make up for lost time by maximizing her 401(k) contribution, which was 15% of her pre-tax income. James was also eligible to make catch-up contributions to the 401(k) plan because she was over 50, and she exercised that option. Her employer also matched 50% of her contributions, which helped James grow her nest egg even more quickly.

 If that wasn't enough, James also opened an IRA and committed to making the maximum allowable annual contribution. GOBankingRates revealed that James had saved $100,000 by the time she was 58 and felt confident enough to take the next step to wealth building: buying a house. She used her savings to put 30% down and then made bi-weekly mortgage payments before paying the loan off within eight years.

By the time James turned 60, she felt like she was ready to take the final step in building her retirement package: developing a stock portfolio. She applied the same discipline she used in getting her bachelor's degree and learned about the market. "I focused on adding money to a mix of strong dividend stocks and low-cost index funds," James told GOBankingRates. "Dollar-cost averaging helped minimize the normal ups and downs of the market."  

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James retired from her full-time job at 65 and transitioned to a part-time job that provides her with a little extra spending money. Some might call it a miraculous turnaround, but that wouldn't be giving James enough credit. It took discipline, planning, and commitment to reach her goals, and she couldn't be happier.  She looks back on her self-motivated transition from financial crisis to a comfortable retirement with pride.

"The key was cutting spending to maximize savings once my income increased. I'm now 68 and loving early retirement," James said. "It just goes to show, it's never too late to turn your financial life around if you focus and work a plan."

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