So retirement is approaching quickly, and you’re worried you don’t have enough money saved. You’re not alone. 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
Unfortunately, those concerns may be justified, especially for baby boomers. A survey from the Transamerica Center for Retirement Studies found that baby boomers have a median retirement savings balance of $147,000.2 While that may be a significant amount of money, it’s unlikely to be sufficient to fund a long, enjoyable retirement.
If you feel like you’re behind on your savings, 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.
Estimate your shortfall.
The first step in any plan is to determine where you want to end up. What are your objectives? 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 shortfall. 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.
Then estimate your annual income from Social Security, a pension and other sources. If those sources don’t cover all your retirement spending, you’ll have to fund the balance with your savings. This amount is your shortfall, and you’ll need to accumulate this amount to meet your retirement goals.
Increase your savings.
The most obvious strategy is to save more money each year. Of course, that may be easier said than done. You probably have other financial goals and needs that feel more urgent than retirement savings. The sooner you can start saving more money, however, the better off you will be when you reach retirement.
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.
Scale back your plans.
If you’re saving as much as possible and still don’t think you can hit your savings target, you may want to take a fresh look at your plans for retirement. With some simple changes to your retirement goals, you may be able to reduce your savings target to a more achievable goal.
For example, you could work a few years longer. That would give you more time to save money and eliminate a few years from your retirement 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 about ways 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 First Fidelity Group. 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
First Fidelity Group
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