Is retirement approaching? Feel like you don’t have enough saved? According to a Gallup survey, you’re not the only one. The survey found that more than 50 percent of Americans are worried about not having enough money for retirement. In fact, retirement is Americans’ top financial concern.1
Another study indicates those concerns may be justified. Research from the Transamerica Center for Retirement Studies found that baby boomers have a median retirement savings balance of $147,000.2 That number may represent a good start, but it’s unlikely to be enough to fund a long retirement.
Fortunately, you may be able to get your retirement back on track if you take quick action. If you don’t have a catch-up plan in place, now may be the time to develop and implement one. A financial professional can help you create your strategy.
The first step is to determine your end goal. In this case, your goal is to catch up on your retirement savings. To do that, you’ll need to calculate your shortfall.Start by estimating how much you’ll spend each year in retirement. You can’t predict exactly how much you’ll spend, but you can create a reasonable projection based on your current spending and inflation. Then estimate your projected annual income from Social Security, pensions and other sources.
Does your income cover your estimated expenses? If not, you may need to fund that spending with distributions from your retirement savings. If you don’t have enough saved to generate income, you have a savings shortfall. This calculation may be difficult, but a financial professional can help you target the right amount.
Consider putting more money away.
This step may seem like an obvious course of action, but we believe it’s also one of the most difficult to accomplish. After all, you probably have other financial obligations that feel more urgent. It may seem hard to allocate more money to retirement when you’re also struggling with debt or paying for a child’s education.
Create a budget and look for areas where you can cut your spending. Then consider being diligent and applying those cost cuts toward retirement savings. If you can’t cut spending, you may need to look at ways to generate more income. The earlier you start saving more money, the easier it potentially will be to hit your goals.
Consider cutting back on your retirement expenses.
Do you feel like you’re already saving as much as possible? If so, there’s another option available. You could adjust your plans for retirement and cut your expected spending. If you spend less money each year in retirement, that means you’ll need less money saved to fund your lifestyle. Cutting your planned spending could help you overcome your gap.
There are a number of ways you could change your retirement plans to eliminate your shortfall. For instance, you could work a few years longer, which would give you extra time to save and eliminate a few years of spending. You could also delay your Social Security filing, which would increase your benefit amount.
Perhaps you could downsize to a smaller home or relocate to an area with a lower cost of living. Maybe you could cut your planned spending on discretionary items such as travel, shopping or hobbies.
Ready to develop your retirement catch-up plan? Let’s talk about it. Contact us at MasterPlan Retirement Consultants. We can help you analyze your needs and implement a strategy. Let’s connect soon and start the conversation.
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Investment advisory services offered through MasterPlan Retirement Consultants, Inc. a Registered Investment Advisor in the state of Georgia. Insurance products & services offered through Fricks and Associates, Inc. MasterPlan Retirement Consultants, Inc. & Fricks and Associates, Inc. are affiliated companies.
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