Are you nearing retirement but worried you might not have enough saved? Here are some steps you can take to save more before you retire.
Approaching retirement can be an exciting time, as you think about the many ways you hope to enjoy your golden years. It can also be daunting, especially if you feel like you haven’t saved enough money to sustain the lifestyle you have in mind. According to the 2023 Retirement Confidence Survey by the Employee Benefit Research Institute (EBRI), nearly a third of American workers do not feel confident in their ability to save enough money to live comfortably throughout their retirement. Fortunately, there are some proactive steps you can take to help boost your retirement savings.
1. Assess Your Financial Situation
A crucial step in addressing your retirement concerns is to take a comprehensive look at your current financial situation. This includes identifying your assets, debts, income sources and monthly expenses and using this information to create a detailed budget. There are plenty of online budgeting worksheets that you can use to help you see where your money is going, so you can identify where to cut back, such as dining out less frequently or finding more budget-friendly entertainment options. You might also consider downsizing your living arrangements to free up additional funds for your retirement savings.
2. Maximize Retirement Contributions
Contributing the maximum amount to your retirement savings account each year is another way to build savings. For 2023, the limit for various retirement plans, such as a 401(k) or 403(b), is $22,500. If you’re age 50 or older and concerned you may have inadequate savings, even if you max out your retirement plan contributions this year, you may be able to contribute an extra $7,500 in catch-up contributions during 2023 if your plan permits. This can make a substantial difference in the years leading up to retirement, helping you build more of a financial cushion for your post-working years.
3. Extend Your Working Years
One of the most effective ways to increase your savings is to delay your retirement date and continue working. If you participate in an employer-sponsored retirement plan, such as a 401(k) or 403(b), this will allow you to keep contributing money – and taking advantage of an employer match, if offered – for a longer period. An employer match is like getting a raise for saving for retirement and can provide a substantial addition to your retirement assets. Delaying retirement also allows the potential for your existing savings to continue to grow and earnings to compound over time. And, by working longer, especially past your full retirement age, you’ll add more years of earnings, which can lead to higher Social Security benefits when you do retire.
4. Explore Alternative Income Streams
If the idea of continuing full-time employment doesn’t appeal to you, consider exploring part-time job opportunities or freelance work that aligns with your skills and interests. Part-time work may provide that extra income to allow you to enjoy a more flexible retirement lifestyle. You can also explore other options to generate income, from renting space if you own a residential property to turning a lifelong hobby into a side business to looking at CDs.
5. Seek Professional Advice
Speaking to a financial adviser or retirement planner can be invaluable when looking at your savings and projected income during retirement. These professionals can guide you toward a more secure financial future by helping you make informed investment decisions and develop a well-thought-out personalized retirement strategy that considers all your income streams. Depending on your age and other factors, they can also help you determine the level of risk you’re willing to take to achieve your financial goals. You should also be sure to speak with your benefits department to learn more about your retirement savings plan.
Feeling like you haven’t saved enough money as you near retirement age can be stressful, but it’s not a situation without solutions. Although the tips above may seem obvious, all too often, individuals fail to take meaningful action on these and other helpful steps ways to save. It’s important to remember that it’s never too late to take action and boost your savings in pursuit of a more financially secure retirement.
