When you are in your 20s or 30s, without much impeding retirement savings, it is certainly a wake-up call, but it is not necessarily a cause for panic. After all, you have a few decades in the workforce to catch up and increase your savings to a healthy level.
But when you are just a few years away from retirement, the lack of savings is far more problematic. Unfortunately, this is the reality that today's baby boomers face. In fact, the average boomer only has $ 136,779 in retirement savings, according to a new survey by real estate firm Clever.
This may at first seem like a decent chunk of money. But keep in mind that older people live longer these days, and those leaving the workforce in their 60s could easily look at a 30-year retirement. In the meantime, if we follow the 4% rule, which states that if you start eliminating 4% of your savings, balance your first year of retirement and then adjust subsequent inflation withdrawals, your breeding egg has a good chance of lasting 30 years. But when we apply a 4% pull rate to the average $ 1
Even if we take the average social security benefit of $ 17,532 today and pledge it to the mix, it's still just $ 23,000 in annual income. This may be enough to cover some of the basics, but it certainly won't create a comfortable lifestyle. Therefore, if you are an older worker whose balance in retirement savings fluctuates at the base of $ 136,779, it is imperative that you take steps to address this shortfall. Failure to do so will put you at risk of struggling financially after your career is over.
Improving Your Financial Picture At Retirement
Approaching your golden years without much savings is not a great place to be, but if that's your reality, know that all is not lost. First of all, if you immediately start cutting costs in your budget, you can free up money to invest in an IRA or 401 (k) and be sure every little bit of it will help. Imagine being able to reduce your costs to the point where you increase your retirement plan contributions by $ 300 per month over a three-year period. That's an extra $ 10,800 for your golden years right there, not including the growth in your savings.
Another option to consider? Get a second job. Doing so will put money in your pocket that is not earmarked for existing expenses, thus giving you the opportunity to save everything. By the way, if you are approaching retirement with a sock for less than $ 137,000, you may have no choice but to work part-time during your golden years to supplement your income – in this case arranging a side gig before time may serve you
You may eventually have to consider postponing retirement for a few years if your savings are not particularly stable. The longer you work, the more opportunities you have to hammer your nest, leaving your existing balance untouched all the time. Extending your career can also allow you to stop applying for Social Security benefits, and this is important because since you are late in retirement after retirement, you can increase them by 8% annually until you are 70 years old. And when you're sitting at under $ 137,000 in an IRA or 401 (k), the higher monthly benefit can make a huge difference.
In an ideal world, you should have more than $ 136,779 earmarked for retirement by the time the last leg of your career revolves around. If this is not the case, make an effort to compensate. While still collecting your salary, you have a solid opportunity to improve your financial picture and avoid problems during your golden years.