By Debbie Reslock
Do you ever wonder when the years slipped away? Weren’t we just in college, having families and trying to make the right career decisions? This next stage of life wasn’t even on the radar.
But now that old saying that growing older is just mind over matter seems to have a different meaning. Because if you don’t have enough money for retirement, it’s going to matter. And you’re going to mind.
How to increase your retirement account:
- Cut expenses.
- Eliminate debt.
- Maximize contributions to your 401(k).
- Catch-up on these employee contributions.
- Convert unused valuable assets.
- Work longer.
- Consider taking a second job.
- Get professional advice.
- Put off Social Security.
What happened to our retirement plans?
If one look at your savings reveals there won’t be enough, you’re not alone. A study by the National Institute on Retirement Security found that 45 percent of households don’t have any retirement assets. When all working-age households were considered, the median retirement account was $2,500 and $14,500 for those who were nearing retirement.
Misery may love company but there’s no level of downsizing that can make that amount of money stretch far enough. The great news is that it’s not too late. But while it’s a relief to know our fate isn’t necessarily sealed, if you’re not on track, get started today.
The first 3 steps toward a better retirement
The first step is defining what you want. Are you trying to maintain your current lifestyle? Are you willing to scale it down a bit? Search online resources for retirement calculators that can estimate expenses and the amount of income you’ll need.
Once you understand where you are financially, be realistic about what it will take to meet your goals. Will your current strategy get you where you want to go? And will you get there when you thought you would or will you need to work a few more years?
If you’re coming up short, start considering what choices are available to get you closer to your target. Everyone’s circumstances are different so choose the options that best fit your situation.
Like most things in life, few of us can have everything we want when we want it. So if your dream retirement isn’t close to what you’ll be able to reach, you’ll need to adjust.
Although it may not always be pleasant, it’s straightforward – either find a way to bring in additional funds or cut expenses. Here are a few approaches you can take to help improve your finances.
10 strategies to increase your retirement account
The simplest but often hardest option is to cut expenses. If you don’t have a budget, set one up. Most people are surprised to find out how much they spend and on what.
This can also be good practice. In retirement, there’s the Rule of 300. According to Todd Tresidder’s report 27 Retirement Savings Catch Up Strategies for Late Starters, for every $1,000 you can cut every month, that’s $300,000 less you’ll need to save for retirement. That’s a lot of budget cutting, yes, but for most it’s easier than finding another $300,000.
Eliminate debt. Especially for credit cards because a large chunk is going only to the interest you’re being charged every month. This is money you could bank so if you carry a balance, commit to paying it off.
Maximize contributions to your 401(k) or similar plan and take advantage of any employer matches. If a plan isn’t offered where you work, set up an IRA. And use automatic withdrawals from your paycheck to remove the temptation to spend this money. Most people don’t miss what they never had.
If you’re over 50, the government allows you to catch-up on these employee contributions. The dollar amount can frequently change so check with your accountant or the IRS for regulations and the latest allowable figures.
Convert valuable assets that aren’t being used or appreciated. People often underestimate the cash they may be sitting on. If you have antiques gathering dust or jewelry tucked away in a drawer, find out what they may be worth and put the amount towards your savings.
Work longer. Every additional year you work is one less in retirement. And believe it or not, some baby boomers don’t want to retire, either because they love what they do or a lifetime of leisure isn’t appealing.
If possible, consider taking a second job while still employed to build up your savings. And those who work part-time after retirement find the extra income can help make ends meet or pay for travel or extras. Just be sure you understand the impact if you began taking Social Security before your full retirement age.
Downsize. Your home or spending. Move to an area that has a lower cost of living. If you don’t want to move, research home equity loans, refinancing to a lower interest rate or whether a reverse mortgage could free up funds.
Get advice on the best strategies for you, whether it’s a professional financial advisor, accountant or from reputable on-line knowledge bases. Do your homework and find credible
Don’t forget about Social Security. Assuming you qualify, those checks will count toward your available income. If you can, put off claiming your benefit until the age of 70 to boost your monthly checks.
Chances are you’ll be glad you did. I have several friends who have already retired and the first lesson they learned was that they want more adventures now – not more stuff.
Stop looking back and focus on the future
If you’re caught in regret that you didn’t save more, you need to move on. Don’t let what you didn’t do affect what you still can. Acknowledge that you have some work to do and then get started.
But hope alone isn’t a good retirement plan. Although again you wouldn’t be alone if that was your fallback position. According to an article by Walter Updegrave for CNN Money, researchers from Ohio State and the University of Alabama found 27 percent of 55-60 year olds had not saved enough to maintain their standard of living once they retired. Yet they believed they were fine.
READ ALSO: How to Retire On One Income
These folks were labeled as unrealistic optimists, which makes me wonder if baby boomers are naturally positive or just reluctant to face unpleasantness. Optimism is a great characteristic but it’s still dangerous when we throw reality out the window.
Instead, I think I agree with Tennessee Williams who said you can be young without money but you can’t be old without it. I’m not sure yet if that’s absolutely true, but I’d rather step up my retirement savings so I don’t have to find out.
About the Author
Debbie Reslock writes about and for the baby boomer and 55+ market, including the amazing journey of aging itself. Her blog, The Third Act, can be found at https://www.debbiereslock.com/