Short on Retirement Savings? How to Make Sure You Have Enough in 6 Steps

In 2019, a report from the Government Accounting Office found that 29% of people 55 and over have absolutely no retirement savings. For those over 65 with some savings, the median amount saved was only $148,000. This means that Social Security is providing most of the income for many people 65 or older. This should remind us that good money management is essential to the process of aging well.

Retirement Savings in 6 Steps

Knowing how much you need to be comfortable in retirement changes on an individual level. There are many factors that contribute to this unique value. Whatever that number may be for you, the best way to ensure you will reach your goal is to start early. But, if retirement is quickly catching up to you and your savings are meager, don’t worry. There are a few steps you can take, even when you are staring down your retirement date, to ensure you can retire comfortably.

Make a Plan ASAP

The first step is knowing how much you need in order to retire comfortably. 

The amount that you plan to save should be based on how much you spend on an annual or monthly basis when you retire. This is often determined by your lifestyle, however, lifestyles can change depending on your needs. Whatever your lifestyle needs may be, you can always sit down and map out your finances so you know the reality of your situation. This way, you can make sound financial decisions that will assist you in reaching your goal. If you are uncertain how to begin, make an appointment with your financial advisor to figure out the best course forward.

Avoid Comparing Yourself to Others

It is human nature to want to compare yourself to others. However, when it comes to how much you have saved for retirement, it’s important to resist the urge to keep up with the Joneses, so to speak. 

When it comes to building wealth, try to suppress your need to get the newest device. When thinking about purchasing a product, particularly an expensive one, aim to get quality and longevity in your purchase. This will prevent you from having to repurchase items as frequently. This can free up finances to invest in your future.

Keep focused on your goal and don’t get wrapped up in what your neighbors and friends are doing.

Consider a Backdoor Roth

If your income allows, a backdoor Roth could assist you in saving more by building tax-free money to use in retirement. The backdoor Roth permits you to put money into a Roth IRA for future tax-free savings without being subject to the Required Minimum Distribution requirements. Though there aren’t immediate tax incentives, you’ll be able to benefit from this in the future. And the future is what we are concerned with.

Use Credit Cards with Benefits

Try to use a credit card with points for your daily expenses. Pay the balance off every month to ensure you don’t gather fees. Then use the reward system to cover your leisure activities. This way the rest of your savings can go towards your retirement fund.

Minimize Your Taxes

Many financial investments offer an element of tax savings, including home mortgage, health savings, retirement plans, and charitable contributions. Consulting a financial professional could be helpful to some in determining which option makes the most sense for your goals.

Consider Your Long-Term Needs

Some insurance policies allow you to purchase coverage that can be paid over the course of 10 years. It is best to purchase these while you are still working to give you enough time to pay them off without using your retirement savings.

It’s never too late to start saving for retirement and making a plan now will save you a headache in the future.

Medical expenses can come out of nowhere, and retirement planning can make the difference between outliving your finances and aging well. With this FREE eBook, you can learn the  6 Money Planning Tips for Your Senior Living.