Are you worried that you may not have enough saved for retirement? If you’re 50 or older and don’t have as much as you would like in your retirement nest egg, you’re not alone. One study from Ohio State and the University of Alabama found that 27% of 55- to 60-year-olds in the U.S. don’t have enough saved to maintain their standard of living during their retirement years.
However, the good news is that there is still time to catch up on your retirement savings. Use the tips below to create an effective retirement plan for over 50:
1. Take advantage of catch-up contributions.
No matter how panicked you may be about catching up on retirement savings, it’s vital that you continue to save as much as possible. Once you have reached the age of 50, you’ll have the opportunity to take advantage of catch-up contributions which allow you to put more money into tax-sheltered retirement accounts like IRAs or 401(k)s. According to the IRS, as of 2018, individuals over the age of 50 can contribute up to $6,500 in an IRA or up to $24,500 in a 401(k). The more you are able to contribute to these accounts the better.
2. Cut back on expenses.
If it looks like you may not be able to reach your retirement savings goal before its time to retire, you may want to consider cutting back on your current expenses as well as your retirement expenses. Getting rid of some of the unnecessary expenses now can help you free up more of your money, which can be contributed to your retirement savings. You should also carefully consider which expenses you are planning for in retirement and how many of these are absolutely necessary. For example, you might decide to retire somewhere that is more affordable than your current area or plan for fewer trips and vacations during retirement.
3. Rethink your retirement age.
Based on your own goals and current retirement savings, you may want to consider delaying your retirement by a few years or continuing to work part-time while in early retirement. This has become a popular option among U.S. workers who are approaching retirement age. In fact, a recent survey from Bankrate found that 70% of Americans report that they want to continue to work as long as they can. Though there is no guarantee that you will be able to keep working until the age of 70, even pushing your retirement age back one or two years can make a significant impact on the amount of money you are able to set aside for retirement.
4. Get help from a financial professional.
When it comes down to it, sometimes you just need professional help to get you on the right track for retirement. If you need developing a retirement plan for over 50, you may want to work with a financial professional who can help you choose the best strategy based on your individual needs and circumstances. A financial planner or investment professional can help you determine how much you need to save for retirement and also give you the tools and strategies you’ll need to reach your ideal retirement savings.
This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.