If you are nearing retirement and are worried that you have very little saved up in your retirement account, you’re not alone. According to a study by the Insured Retirement Institute, 46% of baby boomers have next to nothing in their retirement savings account.
This means that almost half of soon-to-be retirees have to up their savings game to be able to keep aside tangible funds for retirement.
The bad news is if you’re in your 50s, and are just starting to save up for retirement, it will be difficult. The good news here is that you can achieve it. While you may not save up a million-dollar before you turn 65, you can save up a decent chunk to your retirement account.
Picking Up Steam After A Late Start
One advantage people in their 50s have over younger individuals is the benefit of catch-up 401(k) and IRA contributions. Individuals aged 50 and above have annual limits of $24,500 and $6,500 against 18,500 and 5,500 for younger people.
It may not be feasible to start saving $25,000 annually, so you must determine how much you can save, set your goals, create a budget, and work with it.
The first thing you’ve got to do when creating a budget is to determine your monthly expenses to ascertain your money. The idea should be to cut down your costs to allow you to save more. Be honest with yourself, and identify unnecessary expenses. For example, do you need to eat out every other week? Eliminate any cost that you can do without. If you want to intensify retirement savings, consider downsizing to a smaller home to save hundreds of dollars every month.
Making the most of Social Security
Another trick to increase your retirement earning is to delay claiming social security for a few months or years. If you can delay your social security withdrawal until age 70, you’ll receive an additional 24% on top of the 100% you’re entitled to.
This extra can make a huge difference in your retirement account. For instance, if your FRA is 67, and you are supposed to be receiving $1,200 monthly – if you wait until you are 70, you’ll be earning $1,488 per month. A difference of $288 monthly, and $3,500 yearly.
If your employer offers 401(k) matching, consider working for a few more years to boost your retirement savings. If your employer is matching your contribution, that will bring your monthly savings to $600, and you’ll have 472,482 by age 70 if you started at age 65.
Conclusively, while it may be easier to give up on your financial goals, if you want to enjoy a comfortable retirement, then a little planning and determination can help you go far.