3 Ways To Catch Up On Your Retirement Savings
Approaching retirement? Worried that you haven't saved enough to retire comfortably? You're not alone. Retirement is a significant financial challenge that's difficult for many people. It's easy to choose to put money towards other financial goals that seem more urgent, such as updating your home, or paying for your child's education. As time passes, though, it can be difficult to catch up on retirement savings, especially if you've put it off for many years.
Fortunately, there are steps you can take to boost your savings and catch up on your retirement planning. Below are three such steps. You may need to use some combination of these or other strategies to get back on track. A financial services professional can also help you review your savings strategy and make important changes.
Contribute more money to your 401(k). Does your employer offer a 401(k) plan? If so, that could be your most powerful tool for saving for retirement. A 401(k) plan offers tax-deferred growth. That means you don't pay taxes on your growth as long as the funds stay inside the account. That could help you accumulate assets faster than you would in a similar taxable account. Also, many employers offer matching contributions, which means the employer will put money into the account if you do as well. Consider increasing your contribution to at least enough to get the employer match.
Delay retirement by a few years. Most people want to retire as soon as possible. That's an understandable wish. However, by delaying retirement for a few years, you may be able to boost your savings and improve your financial stability. When you put off retirement, you accomplish a few goals. One is that you give yourself more time to save. You also eliminate years off your retirement that may have to be funded with your savings. That can help you make your savings last longer. Finally, you give yourself a chance to delay Social Security payments. Generally, the longer you wait to file for Social Security benefits, the greater your payment will be. Delaying your retirement can pay big dividends.
Give yourself guaranteed income. One of the most difficult parts of retirement can be planning your income. You no longer have a steady paycheck on which to rely. If you're taking income from your savings, the distributions could fluctuate based on your investment performance. There's also the chance that you could spend too much in the early years of retirement and run out of money.
You may want to consider creating a stream of guaranteed income that you can't outlive. For example, you could use an annuity. There are many types of annuities that provide different benefits, but one of the most common is guaranteed income that lasts as long as you live. They essentially convert a portion of your savings into your own personal pension. That could provide certainty and stability to your retirement.
Ready to get your planning back on track? Talk to a financial services professional in your area today. They can help you determine which catch-up strategies are best for you.
