Is retirement quickly approaching? Worried you don’t have enough saved? You have company. According to a Gallup survey, more than 50 percent of Americans are worried about having enough money for retirement. In fact, retirement is Americans’ top financial concern.1
Those worries may be justified, especially for baby boomers. Research from the Transamerica Center for Retirement Studies found that baby boomers have a median retirement savings balance of $147,000.2 That amount may represent a good start, but it’s unlikely to be sufficient to fund a long, enjoyable retirement.
The good news is there’s still time to get back on track. However, you may need to take action quickly. Below are three simple steps you can take to correct course. A financial professional can help you develop and implement a plan that’s specific to your needs.
Step #1: Estimate your savings gap.
The first step in any plan is to identify your goals. In the case of a retirement strategy, your objective probably is to save an amount that’s sufficient to fund your lifestyle. Start by estimating your savings gap, which is the amount you need to save to catch up. Determine how much you may spend each year in retirement. You can use your current spending as a benchmark, but be sure to factor inflation into your estimate.
Once you’ve estimated your annual spending, do the same thing with your retirement income. If your projected income won’t cover your annual spending, you have a savings gap. You’ll need to accumulate more assets to fund the difference.
Step #2: Boost your savings.
The most obvious course of action is to save more money each year. Of course, that’s often easier said than done. You may have other financial issues that feel more urgent. However, the sooner you can start saving more money, the easier it will be to hit your target.
Create a budget and look for areas to cut back so you can allocate more money to savings. Also, consider ways you can generate more income, such as working a second job or freelancing. Look for any opportunities to generate more cash to contribute to retirement.
Step #3: Adjust your plans.
If you’re saving as much as possible and still think you’ll fall short, you may want to take a fresh look at your plans and look for areas to cut back. With some simple changes to your retirement goals, you may be able to reduce your savings target to a more achievable goal.
One option is to delay retirement by a few years. That would give you more time to save money and eliminate several years-worth of expenses that you would have to fund with savings. It also may help you delay your Social Security filing, which could increase your benefit amount.
Also, think of how you could cut your spending in retirement. For instance, could you downsize to a smaller home? Could you cut back on your planned spending for travel, shopping or hobbies? The more you can scale back your plans, the easier it may be to meet your savings objective.
Ready to develop your retirement catch-up plan? Let’s talk about it. Contact us today at Legacy Retirement Services. We can help you analyze your needs and implement a strategy. Let’s connect soon and start the conversation.
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17698 - 2018/5/30
Terry L. Tyler