If you’re coming closer to the retirement date you envisioned but haven’t been able to save anything toward it, you’re not alone. According to financial gurus, this is a pretty frequent circumstance.
“I believe it’s almost taboo to talk about it,” says Cory Phillips, a financial advisor at Fort Pitt Capital Group in Pittsburgh who helps clients plan for and live in retirement. According to Fidelity, the average retirement account for persons in their 50s is $160,000. However, one out of every four individuals does not have any retirement savings.
Saving for retirement is a form of delayed pleasure, which is a tough idea to grasp, especially when the payoff is decades away. So there’s no shame in struggling with it, and failing to save in the past isn’t a cause to abandon your retirement goals entirely.
If you’re wanting to prepare for retirement, there are a few basic actions you can do.
Begin saving and take advantage of compound interest
There’s still plenty of time for your money to grow in a retirement account like an IRA or an employer-sponsored plan like a 401(k) or 403(b) if you have around a decade till retirement (b). According to experts, investing in stocks and bonds may double your money in as short as seven to ten years, so deposit as much money as you can into such accounts as soon as you can.
In 2021, you may contribute up to $19,500 to your 401(k), and if you’re 50 or older, you can take advantage of catch-up contributions, which enable you to contribute an extra $6,500 this year.
Deferring Social Security benefits is a good idea
Delaying Social Security is one of the finest and most straightforward strategies to boost your retirement income. Consider working part-time to offset expenditures until you reach retirement age. Although staying in the employment as you become older might be challenging, Parrish advises that you do so if at all feasible, “because that will produce more than simply saving some more money,” he adds.
The longer you wait to claim Social Security, the more money you’ll get. For those born in or after 1960, full retirement age is 67, but waiting until 70 will pay you up to 134 percent more than you would have gotten just a few years earlier.
Consider your most significant monthly costs and how you may cut them. If you have more space than you need, consider downsizing. Americans spend the biggest percentage of their monthly budget on housing at the start of adulthood and in their older years; consider reducing if you have more space than you need.
If you like living with others, try if younger family members would be willing to come in and contribute financially; you may also see if your town or city has a roommate program for seniors. Programs like this have been successful in New York City, San Francisco, and other cities.